I was chatting with a few friends recently, and we were all complaining about our fixed-rate mortgages. Compared to the new loans on the market, our interest rates are significantly higher. It’s disheartening to see the monthly payment (cuota) every month. So, I started looking into the possibility of moving my mortgage to another bank, a process known in Spain as Subrogación de hipoteca.
Why Switch Mortgage Lenders?
The reason is simple: to save money! The terms of mortgages signed a few years ago, whether fixed or variable rate, are likely much worse than the competitive offers banks are making now to attract new customers. Switching to a bank with a lower interest rate means saving money every month, which adds up to a substantial amount over the years. Additionally, some mortgages in Spain come with too many bundled products or poor customer service, which are also common reasons people want to switch. However, remortgaging isn’t a free lunch; there are associated costs that you need to calculate beforehand.
The Main Process and Costs of Subrogation
I consulted with Santander and BBVA and talked to some friends who have gone through the process. Here’s a general outline of the steps:
- Find and Apply to a New Bank: This is the first step. Compare offers from several banks to see the new mortgage terms they can provide. You can check their websites or speak directly with a bank advisor. They will conduct an initial assessment of your financial situation.
- The New Bank Issues a Binding Offer: If your assessment is approved, the new bank will provide you with a detailed binding offer for the Spanish mortgage application, which outlines all the new terms and conditions.
- Notify Your Current Bank: Once you have the offer, the new bank will inform your current mortgage lender. By law, your current bank has 15 days to decide whether to match or beat the new offer to keep you as a customer.
- Sign the Notary Deeds: If your original bank doesn’t match the offer, or if you decide to switch anyway, you will need to go to a Notary (
Notario) to sign the new mortgage documents. This step is mandatory.
The whole process might sound straightforward, but you need to be aware of the costs involved. Although the new mortgage law of 2019 eliminated most of the fees for the borrower, there are still some expenses you might have to cover. To help clarify, I’ve put together a simple table of the typical costs, which is also a good way to spot unusual fees that might signal a suspicious mortgage:
| Fee Item | Who Usually Pays? |
|---|
| Property Appraisal (Tasación) | The applicant. Costs around €300-€500 |
| Notary (Notaría) | The new bank |
| Land Registry (Registro) | The new bank |
| Administrative Agency (Gestoría) | The new bank |
| Subrogation Fee (Comisión de Subrogación) | May need to be paid to the original bank, depending on your mortgage contract |
The most critical fee is the Comisión de Subrogación. If your old contract includes this clause, you’ll need to calculate whether the savings from the lower interest rate outweigh this fee plus the appraisal cost. For me, the difference in interest was significant enough to make it worthwhile, even with this fee. Moreover, many new banks are now offering to cover the Tasación cost to attract customers. Don’t hesitate to ask about this when you’re negotiating.
The entire process typically takes about 1 to 2 months. I’m currently in the negotiation phase with the new bank, mainly trying to minimize the bundled requirements like insurance. I’m curious if anyone on the forum has successfully gone through a subrogation recently. Was the process smooth? Did you encounter any unexpected ‘traps’? Feel free to discuss and share your experiences!
