How to transfer your mortgage to another bank, step by step

An excellent way to reduce the cost of your mortgage is to transfer it to another bank through a mortgage subrogation. This option allows you to obtain a new loan with better conditions, such as lower interest rates, fewer fees, or fewer linked products. It is important to remember that this procedure requires following certain steps and involves some associated expenses.

Even so, changing your mortgage to another bank is usually advisable if you are paying a high interest rate. If you want to pay less each month, here we show you the process to carry out a mortgage subrogation in Spain step by step.

What does it mean to subrogate a mortgage?

Mortgage subrogation consists of transferring your mortgage from your current bank to another entity that offers more favorable conditions. In this process, the new bank presents a better proposal in order to win you over. Your original bank will probably offer to renegotiate the conditions so that you stay with them; accepting their proposal means carrying out a mortgage novation instead of a subrogation. In any case, the goal is to improve the terms of your current loan.

Advantages of changing your mortgage to another bank

In Spain, transferring your mortgage to another bank offers significant benefits:

• Reduce your mortgage interest rate, saving money each month, and, if you wish, you can also change the interest type (fixed or variable).

• Modify the loan term, adapting it to your financial situation (by shortening or extending the repayment period).

• Eliminate linked products and reduce costs from additional fees.

How to transfer your mortgage to another bank: Key steps

If you want to transfer your mortgage to another bank in Barcelona or any Spanish city, follow these steps:

1. Analyze mortgage offers: compare the conditions that different banks can offer in terms of interest rate, fees, or required products. Use online mortgage comparison tools or seek help from a mortgage broker to find the most convenient option.

2. Negotiate with your current bank: once you have a better offer, inform your current entity. They will likely try to improve the conditions so you don’t leave. If their proposal convinces you, you can opt for a novation. If not, continue with the bank change.

3. Process the documentation: provide the new entity with the necessary documentation (pay slips, employment contract, tax returns, information on other loans, etc.). If everything is in order, you will only have to sign the subrogation and you will begin to notice the savings immediately.

Reasons to hire a mortgage broker

Hiring a mortgage broker can make it easier to find the best offers and speed up the process, since these professionals know the market well and negotiate with different banks on your behalf.

Costs associated with changing your mortgage

Mortgage subrogation involves certain expenses, although they may be lower than those of canceling and opening a new mortgage:

• Subrogation fee: this depends on when you signed the mortgage and its conditions. For mortgages signed after June 2019, the maximum fee is 2% during the first ten years and 1.5% afterwards for fixed-rate loans; for variable-rate loans, the maximum is 0.25% during the first three years or 0.15% during the first five years, and free afterwards. For earlier loans, the fee usually ranges between 0.25% and 1%.

• Property appraisal: you will only have to pay the appraisal cost, between €200 and €500. Notary, registry, and administrative expenses are covered by the bank according to the 2019 Mortgage Law.

• New mortgage expenses: the new bank may charge an opening fee or require linked products, as well as a possible penalty in case of early repayment. However, many of these costs can be negotiated or avoided by choosing entities that do not apply them.