Mortgage Loan subrogation: who is it for?

Mortgage Loan subrogation: who is it for?

Mortgage loan subrogation: who it is for

Mortgage subrogation: who it is for

The mortgage subrogation, also called simply surrogate, defines a simplified intervention that allows the borrower to transfer his / her loan to a new credit institution thus enjoying better contractual conditions. An operation indicated to take advantage of positive market conditions.

The applicant does not incur any additional burden or cost and the starting bank does not have to express his consent for the debtor to obtain the subrogation. Instead, it is at the discretion of the new provider to accept the subrogation request.

The old mortgage is not canceled but transferred , just as the amount corresponds to the residual sum of the starting loan. The duration and rate of the loan may instead change. Hence the potential convenience of the operation.

There are two types of surrogate : bilateral and trilateral surrogate . In the first case, the involvement of the new bank, which we will call the surrogate body, of the debtor and a separate and subsequent deed of receipt is envisaged.

From a practical point of view, this means that we will have the signing of a loan contract intended for the subrogation (document that reports all the new economic conditions) and a unilateral deed of receipt . The latter corresponds to a declaration by the starting bank that ascertains the repayment of the mortgage thanks to the subrogation and the non-cancellation of the mortgage. The deed of receipt is defined before a notary, but does not require the debtor to be present.

Mortgage subrogation: trilateral subrogation

Mortgage subrogation: trilateral subrogation

The trilateral substitute is more complex. As it is easy to understand, in addition to the surrogate bank and the debtor, the surrogate bank is also directly involved. In this case, a single notarial deed is defined which must contain:

  • the new mortgage subrogation contract (obviously including all the new conditions defined between the surrogate entity and the borrower)
  • the receipt of the repayment of the original loan
  • the commitment not to cancel the departure mortgage .

Alternative solutions to the surrogate

Alternative solutions to the surrogate

An alternative to the subrogation is the replacement of the mortgage . In this case, the loan is not transferred to a new credit institution but paid off via a credit line granted by another institution. The main disadvantage lies in the costs: the legal costs (appraisal or investigation) are borne by the customer. While as a plus we have the opportunity to take advantage of a greater number of financial products.

If, on the other hand, you do not want to change banks, you may prefer renegotiation . The new loan conditions are defined between the customer and the bank without involving any third party. The borrower can submit to the bank the estimates drawn up by the competitors to make a change in the conditions of the loan. The lender often chooses not to lose the customer, who can always appeal to the surrogate, and grants cheaper rates.

The mortgage subrogation, also called simply subrogation, defines a simplified intervention that allows the borrower to transfer his / her loan to a new credit institution thus enjoying better contractual conditions. An operation indicated to take advantage of positive market conditions.

The applicant does not incur any additional burden or cost and the starting bank does not have to express his consent for the debtor to obtain the subrogation. Instead, it is at the discretion of the new provider to accept the subrogation request.

The old mortgage is not canceled but transferred , just as the amount corresponds to the residual sum of the starting loan. The duration and rate of the loan may instead change. Hence the potential convenience of the operation.

There are two types of surrogate : bilateral and trilateral surrogate . In the first case, the involvement of the new bank, which we will call the surrogate body, of the debtor and a separate and subsequent deed of receipt is envisaged.

From a practical point of view, this means that we will have the signing of a loan contract intended for the subrogation (document that reports all the new economic conditions) and a unilateral deed of receipt . The latter corresponds to a declaration by the starting bank that ascertains the repayment of the mortgage thanks to the subrogation and the non-cancellation of the mortgage. The deed of receipt is defined before a notary, but does not require the debtor to be present.

Mortgage subrogation: trilateral subrogation

Mortgage subrogation: trilateral subrogation

The trilateral substitute is more complex. As it is easy to understand, in addition to the surrogate bank and the debtor, the surrogate bank is also directly involved. In this case, a single notarial deed is defined which must contain:

  • the new mortgage subrogation contract (obviously including all the new conditions defined between the surrogate entity and the borrower)
  • the receipt of the repayment of the original loan
  • the commitment not to cancel the departure mortgage .

Change mortgage at no cost

Change mortgage at no cost

The Subrogation of the Mortgage was regulated by the Bersani law (Law 40/2007) and subsequently by the Financial Law of 2008.

This procedure is also known more simply as mortgage portability, so when you hear about mortgage subrogation, also refer to the portability of the mortgage.

Mortgage subrogation or portability

Mortgage subrogation or portability

The subrogation of the mortgage, also known as portability, consists in the transfer to a new bank of the credit line used for the purchase or renovation of the house. This is an intervention that allows the modification of the contractual conditions , at least as regards rates and duration, while the mortgage is unchanged: a simple note is made which determines the new beneficiary of the mortgage, or the succeeding bank.

We must specify that, from a technical point of view, the subrogation is not exactly a “shift” of the debt. Only the mortgage changes, which will be enjoyed by the new credit institution as collateral. The loan, on the other hand, will be subject to early repayment and the activation of a new loan will take place at the surrogate bank (leaving the remaining amount unchanged).

Compare mortgages for renegotiation

Compare mortgages for renegotiation

With the introduction of the so-called Bersani Law (40/2007), the surrogate has excluded any cost for the customer. The transfer of the mortgage thanks to the subrogation is therefore at no cost , reason that made this institution so requested among the borrowers. The real limit of the portability of the loan is represented by the size of the loan.

The residual amount cannot be subject to change . The user has the option, in agreement with the incoming bank, to rewrite the type of rate (including the spread set by the credit institution) and / or the duration. Basically the borrower can get a more sustainable monthly installment and therefore have a cheaper financing.

Mortgage rate renegotiation

Mortgage rate renegotiation

There are three steps to follow to proceed with the mortgage subrogation:

  1. find a bank willing to grant the subrogation. This will contact the home bank to find out the amount of the residual debt and define a date for carrying out the intervention;
  2. within a maximum of ten working days, the starting bank announces the residual debt to the new institution, and agrees for the day on which the subrogation will be carried out ;
  3. the new bank completes the subrogation with a single deed, consisting of: contract of the new loan , payment receipt (the document certifying the early repayment of the previous loan), consent to the subrogation and modification of the mortgage.

If the installment of your loan is no longer competitive or simply too expensive, the solution is the subrogation of the mortgage .