Alternatives for a more advantageous mortgage
If you find yourself stuck with a mortgage with terms that don’t suit your current needs, it’s important to know that there are options available. You don’t have to feel tied to your current financial institution; exploring alternatives may be the key to improving your financial situation.
Cancel and start a new mortgage
One of the most direct solutions is to cancel the existing mortgage and contract a new one with another entity. This means that the new bank will provide you with the necessary funds to settle the debt with the old one, allowing you to start over with new terms. However, this option comes with important considerations.
Expenses associated with cancellation
Before proceeding, it is essential to review the clauses of the current contract, as you may have to deal with early cancellation fees. In addition, new costs arise, such as the appraisal of the property and other administrative costs that accompany the opening of a new mortgage.
Mortgage Subrogation: A Simpler Alternative
Another option to consider is mortgage subrogation. This process allows the mortgage to be transferred to a new entity, keeping the outstanding balance but with improved conditions, such as a lower interest rate or a different repayment period.
Advantages of surrogacy
Subrogation is generally faster and less expensive than canceling and opening a new mortgage. Thanks to the Mortgage Law of 2019, many costs associated with the process have been transferred to banking institutions, thus facilitating the operation for customers.
Calculation of savings
Before deciding on surrogacy, it is advisable to calculate the possible savings. Compare the costs of surrogacy with the savings you could achieve, taking into account commissions and other expenses that may arise.
Negotiate with the current bank
Before taking the final step, it’s worth trying to negotiate with your current bank. Many times, entities prefer to keep their customers and may be willing to offer better terms to keep you from leaving.
In short, switching banks for mortgages can be a process that requires careful analysis. Both cancellation and surrogacy have their advantages and disadvantages. The most important thing is to evaluate which option best suits your current financial situation.