Mutual consolidation – subrogation and replacement
Topics of current necessity
It may happen that, due to changed income conditions, the loan made turns out to be too burdensome, causing unsustainable installments.
A suitable solution could be the mortgage consolidation . It is a procedure that allows you to change some contractual elements such as duration, interest rates, the spread …, in order to ensure greater economic peace of mind.
First and foremost, it is necessary to contact the Bank that has disbursed the loan and consider the reasons that have arisen by evaluating the best solutions together.
It is worth noting that, with the consolidation, the original loan is not extinguished, thus keeping all the tax benefits obtained with the previous mortgage unchanged. It does not involve additional costs, such as bank fees or taxes charged to the loan applicant. Furthermore, the guarantees already entered against the loan subject to consolidation will continue to assist repayment of the debt on the due date.
From the legal point of view, only some parts of the contract can be modified:
– The duration, extending the amortization period
– Switch from a variable rate to a fixed rate
– Review the interest rate, obtaining a reduction in the spread
The modification of the contractual conditions cannot be imposed on any of the parties, therefore the mutual consolidation will be possible only by reaching a shared agreement. The request to renegotiate the loan must be sent to the Bank by registered letter with return receipt and the bank must reply in writing.
A notary’s intervention is excluded, so renegotiating a loan is an absolutely free procedure that takes place through a simple private deed .
However, consolidation is not the only possibility for those who need to change their mortgage: there is also subrogation and replacement of the loan: let us evaluate the particularities.
– It gives the possibility to transfer your own mortgage, with the exclusion of penalties or other charges (except the amount of 35 euros due for the mortgage tax) from the Bank that disbursed it to another Credit Institution that offers best conditions
– Allows you to change the parameters of the loan without changing the amount of the residual debt
– A new loan is signed with a new bank, paying off the pre-existing loan
– Additional liquidity can be requested if necessary
Significant differences emerge from the economic point of view, compared to both the consolidation and the subrogation in that , a replacement of the loan provides for a notarial deed with the related costs in addition to those concerning the extinction and reopening of the new loan.
In summary, to evaluate the best solution , it would be necessary to verify precisely the conditions and costs of one’s mortgage and what advantages one would prefer to obtain, comparing alternative offers.