Subrogation or change in bank

If you want to improve the terms and conditions of your mortgage but are unable to do so by negotiating with your bank, you can transfer your mortgage to another bank. This process is called subrogation of the creditor.

How does subrogation of the creditor work?

  • The new credit institution makes a binding offer detailing its conditions.
  • Then, the new credit institution contacts the original credit institution to inform it of the situation and to request certification of the outstanding balance of the loan.
  • The original credit institution has to issue this certificate within 7 days and match or better the new credit institution’s offer within 15 days (if this occurs the subrogation process would not continue).
  • If the original credit  institution does not take on the new conditions or fails to issue the certificate of the outstanding balance within 7 days, a public deed of mortgage subrogation will be executed.
  • By means of this deed, the new institution assumes ownership of the mortgage and transfers the outstanding amount of capital to the original credit institution.

In a subrogation of the creditor, the interest rate applicable, the term of the loan or both can be
modified. If it is wished to modify additional conditions, a novation may be
agreed in advance with the bank and carried out once the mortgage has been subrogated.

You can agree in advance to a novation, following the subrogation of a mortgage, in order to modify any of these conditions.

The expenses involved in a mortgage subrogation are higher than those for a novation, but much lower than those of taking out a new mortgage. If a subrogation has been agreed and is included in the deed, you will have to pay the original credit institution a cancellation fee as well as the notary, registration and management fees for the deed of subrogation, although these are much lower than those of a new mortgage.

Find out more about subrogation of the creditor, in our 2016 Complaints Report (in Spanish)Abre en ventana nueva

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