During the last years, the real estate market of Spain has spectacular growth, from the point of view of the houses constructed as the data of sale of new and used houses. It reflects a significant increase in the number of mortgage loans requested and granted. Credit institutions have seen their profit rates reflect substantial growths.
But with the slowdown in sales due to economic uncertainty, high housing prices, and excess real estate supply, there has also been a decline in the number of applications for mortgage loans.
To meet their objectives regarding the volume of loans granted, forcing banks to adopt new strategies to attract customers in a market where they are no longer abundant. How? By taking away customers from the competition. If there are no new clients, we will have to convince those already in the mortgage market to transfer their mortgage to our entity: this is called mortgage subrogation.
This open war between the entities to snatch customers can benefit the consumer since the entities will offer more advantageous conditions for the new mortgages than those before. On the one hand, some entities offer commission-free mortgages (cancellation, subrogation, etc.), more beneficial interests (from EURIBOR + 0.20 to EURIBOR + 0.35), even an economic compensation that can be a percentage of the total of the mortgage (1% – 2%) or a fixed amount (over $600). In addition, they usually offer the possibility of extending the repayment terms up to 35 or 40 years so that the monthly installments are lower.
Of course, such generosity on the part of banks as payment to our affiliation to their services must have counterparts. Almost all entities want us to become loyal customers, and that our list of contracted products is not limited to the mortgage. Therefore, the contracting of the mortgage loan will often be conditioned to the simultaneous contracting of the associated life and home insurance, to the direct debit of our payroll, to the domiciliation of a certain number of receipts, etc.
When will it be convenient for me to take the step of changing my mortgage?
Logically, as we always recommend, the main thing is to study the multiple offers carefully, go to many entities or inform us online. We will then have to evaluate the options and decide according to several criteria:
On the one hand, assess the total savings we will get throughout the life of the mortgage (if we maintain it with a term that is not greater than before).
Also, assess if we do not save on the total cost. We can get more extended return periods to go more relaxed every month (if we do not have this problem, we do not want to extend the return period because it ends up paying significantly more).
Weigh the cons, such as the subrogation and cancellation fees, the notary expenses of the new mortgage, or the insurance already paid to the other entity that it will lose.
In summary
We can say it is possible to save a lot of money if we can find an attractive offer and we know how to negotiate well, without ever forgetting that in this type of transaction of mortgage entities, these are the ones that are very interested in having us as clients.
It must take that strength advantage to obtain better conditions for our mortgage credit and thus reduce our present and future expenses.
A negotiation option that could be interesting would be to present to the director of our entity a concrete offer agreed with another entity better than the one we currently have. The conditions improve if he wants to continue counting on us as clients.
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