Mortgage change

Mortgage change

In the world of real estate financing, the need to change mortgage arises when market conditions, your personal circumstances, or the loan terms themselves no longer fit your objectives. This article addresses, in a professional and clear manner, what it means to switch the mortgage to another bank, when it is advisable, why it is worth it, and, above all, how to do it efficiently and safely.

When is it advisable to change a mortgage

Changing a mortgage is not a decision to be taken lightly, but there are moments when it can be especially advantageous:

- Lower interest rates: if the prevailing interest rate is higher than what other institutions offer, there could be significant savings over the term. A switch to a bank with a lower rate can reduce the monthly payment and the total cost of the loan. - Improvements in the term or the installment: if your goal is to reduce the monthly payment to gain monthly liquidity, or, conversely, to shorten the term to pay less interest over time, the change can fit these goals. - Costs of the current mortgage: if your current mortgage has unfavorable clauses, high novation fees, early repayment fees or cancellation charges, changing banks can alleviate these costs. - Review of linked products: if your current bank has stopped offering competitive conditions or requires you to contract tied products with additional costs, competition can open the door to a more favorable package. - Personal situation: changes in your income, job stability, or the need to adjust the payment to a new family or personal budget can make a change more convenient. - IRPH and Euribor: when the index or the hybrid index that influences your payment is problematic or prone to variations, looking for a mortgage with a more stable or fixed index can be advantageous.

Why changing a mortgage can be a good decision

- Economic savings: the interest difference between your current mortgage and an offer from another bank can translate into real savings, especially if the new loan offers a fixed rate or a more favorable variable rate. - Greater clarity and transparency: often, current products include clauses that inflate financing costs or limit your freedom to maneuver. A change can simplify and clarify conditions. - Flexibility and customization: after review, you can adjust the term, the installment or the interest rate to your actual situation, improving medium- and long-term financial planning. - Improvement of services and customer support: a new institution can offer closer service, a more efficient online platform, personalized advice and clearer management conditions. - Preparation for economic changes: in an environment of fluctuating rates, consolidating a mortgage with a stable index or with a fixed rate can reduce exposure to market rises.

What to consider before starting the change

- Exit and entry costs: analysis of penalties for early cancellation, opening fees, appraisal of the property and notary expenses. It is essential to compare these costs with the expected savings. - Term and installment: define whether you prefer to reduce the monthly payment or shorten the term to pay less interest. This influences the amount to negotiate and the viability of the change. - Appraisal and valuation of the property: some banks require a recent valuation to approve the new mortgage; make sure you have an appropriate valuation. - Job and personal situation: documentation such as payslips, income tax return, income certificates and, if applicable, certificates of job stability, are required for the lender's assessment. - Linked products: avoid contracting unnecessary products to obtain a lower IRR. Evaluate whether you really need insurance or linked accounts and their costs. - Verification of expenses and commissions: ask yourself whether the total cost of the change is worth the estimated savings in interest.

How to change your mortgage: practical steps

1) Assess your situation and set goals - Review your current installment, interest rate, remaining term and total cost. - Define if your objective is to reduce the installment, shorten the term or improve stability. - Estimate a reasonable range of offers for comparison.

2) Review your current contract - Read clauses on interest, reference index, commissions, and early cancellation conditions. - Identify possible advantages of novation within the same institution or whether it is more convenient to “subrogate” to another bank.

3) Consult with several banks - Request non-binding offers and compare interest rates, commissions, terms and possible linked products. - Ask for a clear comparative table that includes APR, monthly installment, total cost and exit cost.

4) Calculate net savings - Make an estimate of annual and total savings over the new term. - Consider tax deductions if applicable in your country and any costs associated with the change. - Take into account indexation variations (Euribor, IRPH, etc.).

5) Gather the documentation - Property taxes, deed, notes, appraisal report (or permission to appraise). - Proofs of income, employment status, outstanding debt and any recurring expenses.

6) Submit the application - Submit the formal application at the new institution. Ensure that the comparison reflects your calculations and the reality of your finances. - If the institution requests guarantees, evaluate them carefully.

7) Negotiation of the offer - Negotiate installment, term and possible reductions in commissions. - Ask about the possibility of eliminating or reducing tied products you will not use.

8) Signing and post-grant management - Once the offer is accepted, sign the new loan, plan the amortization schedule and verify that the exit from the old institution has been managed correctly. - Maintain documentary control: deeds, notary, property registry and proof of cancellation of the previous mortgage.

Practical tips to maximize the success of the change

- Be proactive: do not wait for your interest rates to rise or for other factors to change. If you identify a reasonable savings opportunity, act in time. - Maintain the necessary liquidity: assess whether you will need funds for closing costs and a reserve for contingencies. - Request estimates in writing: request formal offers, with no ambiguities, to make fair comparisons. - Check the real cost over 15/20 years: often, the initial savings may be offset by accumulated costs if the term is excessive. - Evaluate the effective rate: do not just look at the nominal rate; the APR or IRR will give you a real view of the cost of credit over time. - Consider professional advice: a mortgage advisor can help you interpret clauses, indices and optimize negotiation.

Cases and common scenarios

- Case A: installment reduction with extended term A family seeking more monthly security may opt for a lower rate and a slightly longer term. Although the total cost increases slightly due to interest, the reduced installment improves monthly liquidity and allows resources to be allocated to other goals. - Case B: term reduction with similar installment If the priority is to shorten the debt period, negotiate a competitive rate and an installment that, although higher than Case A, remains sustainable and allows finishing the mortgage earlier. - Case C: change of index to a fixed rate Faced with a volatile market, switching to a fixed-rate mortgage can offer stability and payment predictability for a set period.

Common mistakes to avoid

- Not calculating the total cost of the new loan versus the current one. - Accepting tied products without real need. - Not reviewing the appraisal and its associated cost. - Underestimating closing costs and cancellation of the existing mortgage. - Not requesting offers in writing and clear comparisons.

Conclusion

Changing mortgages can be a strategic decision to improve your family’s financial health and optimize your home as an investment. The key is to rigorously assess your situation, compare offers from several entities, understand the fees and real cost, and carefully plan the process. In our agency, we have specialized consultants who can help you analyze your current mortgage, identify savings opportunities and manage the entire change process with transparency and professionalism.

If you are thinking about changing banks or simply want to explore whether your current mortgage offers better performance, contact us. We offer a free diagnostic, a clear comparative table and a personalized action plan so you can make the best decision, with the assurance that every step is aimed at maximizing your savings and protecting your assets.