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Buy a flat always brings a variety of expenses, notary, registration, taxes, VAT or ITP who account for approximately 10% of the housing. In addition, banks often offer mortgage loans not more than 80% of the appraised value of the floor, so we would need a considerable amount of savings before buying a flat. This is not always possible. Some people need to finance 100% of the floor and more, also finance expenditure.

To do some organizations have created 120% mortgages, ie mortgages in which the bank will pay 120% of the appraised value of the floor. The truth is that few entities that offer and in all cases require that the count loan guarantees sufficient to cover the extra amount. Otherwise, in case of default, the bank would be checked as it could happen that the value of the apartment does not cover the debt.
Disadvantages

The main disadvantages are that these loans have higher fees and higher interest rate than other mortgage loans because the bank charges and the risk premium you’re supposed to Mortgages 120. Usually also require the recruitment of other banking products such as cards, pension plans or home insurance that ultimately add to the amount of our monthly fee.

Mortgage 120 in Spain is normally required for immigrants who want to buy a flat. It is a service that banks advertise but through a financial agent, such as an agent associated with a real estate company can be reached, provided this guarantee.

When mortgage loans had always been taken into account by banks to the floor, over time, increase its value increasing the guarantees for the bank. With the current housing crisis is not so clear that the story inexorably rise in value, so now 100% mortgages and 120% are more difficult to get a few years ago and, as we said, with higher costs.

Novation and subrogation – Today, the increasing competition in the financial sector, encouraged even by online entities, and increased financial literacy of clients, makes the supply of mortgage loans is becoming more diverse and flexible.

Thus, it can happen that we are paying interest on our mortgage loan are significantly higher than the current market. So we have two options to renegotiate the terms of the mortgage, renegotiate the current conditions with our organization, novation, or transfer our loan to another entity that offers better conditions, subrogation.
Novation

The renovation is to renegotiate the loan with our bank and agreeing improvements in the conditions of our mortgage. Can agree a decline in the interest rate or even change the way of calculating interest. You can also decide, for example, change from fixed-interest loan to a variable interest loan, modify the repayment period or change the reference rate is applied.

Changing mortgage – may be that a situation changing interest rates on the market or any other personal circumstances need a change of mortgage. When we consider a change of mortgage we have the opportunity to renegotiate the terms of our mortgage. Speaking of change of mortgage we are talking basically two possibilities: the novation and subrogation.

Through the novation will try to improve the conditions of our mortgage with our financial institution, ie without switching banks. Learn more about the innovation.

Through subrogation will transfer our mortgage to another financial institution to improve those conditions. Learn more about surrogacy.