You can move, transfer, transfer, subrogate, the mortgage loan with which you are paying your home. For what? To find the best interest rate and lower your accounts.
Recently, a client acquired a new apartment with a mortgage loan. I was happy. For a long time I wanted to move to Merida (not only for the beaches and food, but to start a great venture for tourists). He had done a good business. With some curiosity and a lot of mischief, I asked him:
"Not to lose money, of course," I replied and I could see in his eyes that I would have to explain everything I know about mortgage subrogation.
What is a subrogation or transfer of mortgage
Many people believe that, when closing the business of buying your home, the terms of the business are unmodifiable. It is not true. Changes can be made. It can be subrogated, according to the technical term. In Mexico, in 2014, the Law on Transparency and Competition Promotion in Guaranteed Credit was approved, which organized these processes.
The subrogation of a mortgage is a legal business. You can substitute, delegate, replace, rights and obligations. It works that simple. My friend, for example, took a 15-year loan. A long term. In 15 or 20 years many things can happen and one of them is that interest rates fall. Well, if rates go down, do you think he would like to take advantage of that market condition and pay less for his credit? It seems to me that you would too. You would seek to “subrogate the creditor”, that is, change banks to improve the conditions of your business.
When to request a credit transfer?
That is a good question.
You must request a mortgage transfer when you verify that the market indicators are better than those at the time you signed the mortgage and began paying your credit. If you realize that interest rates are lower than what you have in your credit, it is time to act. It is advisable to change the bank that lent you the money for another financial institution that offers you a more profitable business. Some people talk about "moving credit", "transferring the mortgage." The technical term is "subrogate the creditor" (a lawyer would explain how to modify the creditor). That is the way to save on your monthly installments. Why keep paying more money for your credit if you can pay less?
When you have already paid half or more of the total installments of your credit, the business is probably not as interesting: you have already assumed a large, large, large part of the cost of your credit. In the first installments of your credit you are paying more interest than capital. There comes a time, when the equation changes and you start paying less interest and more capital.
It is likely that in some cases you should wait at least one year to move your credit to another entity. Each case must be evaluated.
How a mortgage moves from one bank to another
The procedure is similar to that of the mortgage loan application. You will have to fill out the same credit application, provide the documents that demonstrate your ability to pay, work certificates, deliver the copy of the deed and accept the charge for the appraisal that will be made to the property.
When requesting a “subrogation of creditor” you will be modifying the bank that lends you the money, guaranteeing the continuity of the business and respecting the mortgage that was already constituted. The change will not imply the signing of a new deed or a new mortgage. A procedure will be sufficient before a notary and before the Property Registry. The cost is relatively low compared to the savings in the monthly accounts.
That is the simple part.
The important part, really important, is this: solving is whether or not it is relevant to make the change. You need to verify if by moving or transferring the credit you will be able to lower your accounts.
Where to request a subrogation?
You have two possibilities: go from bank to bank asking about the rates and the different mortgage loan products they have. Make the comparison and determine the costs to make the decision. I recommend it if you have the time and willingness to wait for your appointments (which will be many).
The second possibility is to hire a mortgage broker or intermediary of credits and mortgage transfers, such as Barnaby Rudge. Know the market, know which bank and what products suit you according to your current conditions. A broker does not charge you anything, they receive their fees from the banks (it works similarly to the insurance business).
Why make a mortgage transfer?
I have a habit of telling our clients that they should be responsible with their credits. Not only take care of timely payments. It is important to understand that the business is alive and the variables that affect it must be monitored.
If you had a company and they offered you safe and cheaper credits to buy machinery, would you do it? Paying less for your credit is big business. By lowering the interest rate, you lower the cost of money over time. When you save, for example, 10,000 pesos a month, for ten years, what would you like to do with that money?