With the latest rise in the Euribor, holders of a variable rate mortgage will see how their installment will become more expensive over the coming months. Thus, a family that renewed the price of their loan today would see the annual bill rise by 1,096.08 euros or 91.34 euros in the monthly installment, taking an average mortgage as an example.
Even before this rise in the indicator, a notable transfer from variable rate mortgages to fixed ratefearing that the worst omens would come true, as has happened.
However, it is still possible to change our mortgage to a fixed rate. In doing so, it is sought that the interests are always the same and are not subject to market variations, although the conditions may not be advantageous at all times.
In any case, it is advisable to deliberately study and compare what fixed-rate mortgages offer us with respect to what the variable-rate mortgage requires, since it is likely that many banks have hardened and made its conditions more expensive from the last ad.
Novation or subrogation
To do so, there are two options: either do it with our own bankor do it with another bank. The first option is known as novation, and consists of changing the conditions of the mortgage initially contracted for another in the same bank. By doing so, we seek to change the interest rates but consequently the loan or the repayment term may be extended. In the same way, making this change usually implies management expenses that the bank passes on to the client, as well as some commissions.
The second option is known as subrogation, and consists of changing the conditions of the contracted mortgage for those of another bank. This change implies a commission of 0.25% during the first three years of the contract and 0.15% for the following two, in the event that the first mortgage was contracted from June 2019, after the entry into force of the Real Estate Loan Law. In case the signature was earlier, you must consult the commission that can be applied with the banking entities.
Either in one case or another, the bank can require the mortgage holder to add products to the mortgage contract, such as the direct debit of the payroll or the contracting of insurance or other products. In any case, these changes are not mandatory, and it is up to the mortgage holder to decide whether to accept or deny the conditions offered by the bank.
