The inflationary spiral that is affecting the EU economies has caused a rise in interest rates by the European Central Bank (ECB), following in the footsteps started a few months ago by the United States Federal Reserve.
This increase translates into an increase in Euriborthe reference index to calculate the mortgage payments for those who have contracted a variable rate.
Is it possible to change a mortgage from variable to fixed?
This worsening of mortgage conditions makes many people who opted for a variable mortgage at the time wonder if it is feasible change it to a fixed. The answer is Yesand there are also various ways to replace one modality for another, although the ease of accessing one or the other, as well as the cost of the operation, will vary depending on the case.
In any case, today changing from a variable mortgage to a fixed one would always be highly recommended option for savings purposesparticularly in those who subscribed three or four years ago when interest rates and, consequently, the Euribor were very low.
How to change a mortgage from variable to fixed
If you have a variable mortgage to make it fixed, you have three alternatives: novation, subrogation or cancellation of your current loan to contract a new one.
The three ways are similarly valid for legal purposes, although the conditions and costs to be faced will be different in each case. Next, we will examine in depth the three ways to change a variable mortgage to a fixed one:
Novation
The mortgage novation It is a mechanism that involves the change of certain mortgage conditions, and these may be the commissions charged by the bank, interests that must be satisfied, or directly the substitution of a complete product: the variable mortgage for a fixed one.
This change can be requested by the userO well offered by the entity itself to prevent the client from going to another bank through subrogation, canceling the mortgage or, in the worst case, not being able to repay the loan.
Regardless of the petitioner, the both parties must agree in transforming the mortgage from variable to fixed, as well as in the conditions in which the change is carried out.
As for the cost that this would imply for the client, according to the latest mortgage legislation the commissions for modifications/novations during the first three years of the mortgage should not exceed 0.15%. While already at From the fourth year the entities could not charge anythingwhich makes it highly advisable to assess the time elapsed since the variable mortgage was contracted when making the change.
However, there are financial entities that do not charge commissions for novations to their clients, even if they are carried out within the time interval authorized by the legislation to do so. So before taking any step it is highly advisable to ask about it in our bank office.
Subrogation
Another option available is the subrogation. Subrogating a mortgage also means change your termseither to benefit from better interest rates, vary repayment terms, replace the holder or as in the case at hand move from a variable mortgage rate to a fixed one. The main difference with the novation would be that here there would be a bank change.
Therefore, it is very interesting study the offers for subrogations that the different banking entities offer, and once the best option has been chosen, transfer the interest of subrogating the mortgage with them to that bank.
After the acceptance of the entity, it is up to the client inform your old bank of the intention to do this operation, although most of the paperwork and the costs of the subrogation will be assumed by the new entity.
In accordance with current mortgage legislation, after making the request, the The bank with which the mortgage was signed would have 15 days to match the conditions offered by the new entityor what is the same to propose a mortgage novation that collects all the advantages that the client would obtain.
As for the cost that the subrogation would have, would be similar to that of the novation, with the same exemption from the fourth year that we saw. But nevertheless, it may involve performing a new home appraisal (whose price would be 200 and 500 euros), and in some unusual cases the payment of an opening commission in the new bank.
Mortgage cancellation
Canceling the mortgage entails pay it off in full to the bank with whom you contracted, something that is usually done by requesting a new home loan with another entity.
Thus, this route would imply finishing paying the variable mortgage that you have to replace it with a fixed one.
This solution has as drawback los additional costs that has to be faced. first in the notary, to sign the cancellation deeds of the old loan and formalize the new one. To this is added the Tax on Documented Legal Acts (IAJD), as well as the commission for early amortization to the old entity, apart from the hypothetical opening commissions that would have to be paid in the new one.
We hope we have shed some light on the issue of change from variable to fixed mortgagesand that you can make the decision that is financially most convenient for you.