June 15, 2024

Family Care And Protection

How much commission can I be charged for subrogating my mortgage?

More and more people are considering subrogating the mortgage to take it to another bank that charges them lower fees. Now, what many do not know is that if we divorce our entity to go to another, it can charge us a commission, the cost of which can reach several hundred or even thousands of euros. In this article, we will explain what the price of this charge can be, as well as what other expenses must be paid to carry out this operation.

The cost of the surrogacy commission is regulated

It is important to know that the bank that we abandon cannot charge us whatever it wants, since the price of the commission for subrogation is regulated. However, as the legislation has been changing, its cost will depend on the moment in which we contract the original  Phh mortgage.

Attention! We cannot be charged this commission if it does not appear in the mortgage deed that we intend to transfer.

If the original mortgage was contracted before April 2003

If we sign the mortgage contract before April 27, 2003, the maximum price of this charge can be up to 1% of the outstanding amount of the loans at the time of changing the bank.

If it was signed between April 2003 and December 2007

On the other hand, if we contract the credit between April 27, 2003, and December 8, 2007, the commission may have a cost of up to 0.5% on the capital that remains to be returned when carrying out the transfer.

If contracted between December 2007 and June 2022

If the original mortgage was formalized between December 9, 2007, and June 15, 2022, we could be charged two charges, as long as they appear in the deed:

  • A subrogation commission of up to 0.5% on the pending amount (0.25% if five years have passed since the contract date)
  • compensation for interest rate risk, the cost of which is not regulated (it is usually between 0.5% and 1.5% of the outstanding capital). It cannot be charged if the interest on the mortgage is variable and its price cannot exceed the financial loss generated, which would occur if the transfer were carried out at a time when market interest rates were lower than those of the subrogated mortgage.

If it was formalized after June 16, 2022

Finally, if the loan that we want to subrogate was signed after June 16, 2022, this commission may have the following limits:

  • If your interest is variable, it can be up to 0.25% on the outstanding amount if three years have not yet passed or up to 0.15% if five years have not passed (0% thereafter)
  • If your interest is fixed, it can be up to 2% on the outstanding capital (1.5% if the term has already passed 10 years)

In both cases, the cost of the charge cannot exceed the financial loss that has been generated for the entity by the subrogation.

Attention! In all these cases, if we take advantage of the transfer to switch from the variable to the fixed-rate, this commission may have a maximum price of 0.15% of the outstanding amount (0% if the change occurs after the fourth year of life of the credit ).

Are there other expenses for subrogating the mortgage?

Yes. By law, most of the expenses to formalize the subrogation must be paid by the bank, but the client has to pay the cost of the appraisal of the home and the cost of the copy of his deed. In general, the combined price of these items is usually around 350 euros on average.

There are banks, however, that can pay us some of these expenses. ING, for example, offers to cover the cost of the appraisal if we commission it. This bank allows us to lower the interest to the Euribor plus 0.99%, in exchange for direct depositing the payroll and taking out life and home insurance.

Is changing banks worth it?

Although it costs us money, subrogating a mortgage usually pays off. And it is that this operation, normally, is used to lower the interest applied, which allows you to pay lower installments and save several thousand euros in the long run.

In any case, it is always advisable to calculate how much we would save with the change of bank to ensure that it is worth paying the aforementioned expenses.