How can I change my mortgage from variable to fixed rate?


These days, with Euribor going up and up and making monthly mortgage repayments more expensive, many bank customers are considering changing their mortgages from variable to fixed rates. If you are in this position, do your maths, think about it carefully and, if you finally decide to do so, you can opt for a novation, i.e. agreeing with your bank to change the interest rate, or for a subrogation of the creditor, i.e. taking your loan to another bank.

If you decide on novation:

Your bank may charge you a novation fee provided that it is stated in the agreement. In general, it is calculated as a percentage of the outstanding loan amount.

If the change finally takes place, the bank must provide you with the mandatory pre-contractual information documents, including the European Standardised Information Sheet (ESIS) and Standardised Warning Sheet (FiAE), at least ten calendar days before the signing of the novation, which must be formalised before a notary.

If you prefer a subrogation:

In this option, you transfer your mortgage to another bank. To do this, the new bank must present you with a binding offer with the conditions of the new mortgage. The old bank, in this case, can exercise a sort of right of first refusal and express its intention, before a notary, to match or improve the binding offer of the new bank. In that case, the change could not take place and you would be obliged to keep your mortgage with the same bank. However, you would benefit from the new conditions.

The costs associated with mortgage subrogation tend to be higher than those associated with novation.

Please note that if you had signed your loan before 16 June 2019, the Law regulating Real Estate Credit Agreements now in force will apply to it from the date of the novation or subrogation.

Lastly, there is always the possibility of arranging a new mortgage and paying off the old one early, but, as well as more formalities, this option generally entails higher costs.

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