When investigating the situation of the real estate credit, it is necessary to ask oneself what the subrogation of the mortgage is, a very valid solution to improve the sustainability of the amortization plan.
Subrogation: what is it?
To understand what the mortgage subrogation is, it is necessary to refer to Law 40/2007, the so-called Cogilaw. This measure gave customers the possibility of transferring mortgages from one credit institution to another, without having to pay the appraisal and investigation fees. The institution of the subrogation refers to article 1202 of the Civil Code, which speaks of subrogation by the will of the debtor.
In the case of the subrogation, the new bank, technically known as the surrogate bank, takes over the original mortgage guarantee which, unlike what happens with the replacement, is maintained.
Bilateral subrogation: that’s what it is
When investigating the question of what the mortgage subrogation is, it is necessary to consider two types of contract: the bilateral subrogation and the trilateral subrogation. Let’s see their characteristics starting from the first case. The bilateral subrogation, as is clear from the definition itself, is a contract in which two actors intervene: the customer and the surrogate bank.
Bilateral subrogation is a process that is divided into two phases. The first is the stipulation of the loan agreement, the second, however, is the drafting of the unilateral deed of receipt, which contains the formal commitment of the original bank regarding the repayment of the loan by subrogation.
Trilateral subrogation: technical specifications
We continue to talk about what the mortgage subrogation is by analyzing the peculiarities of the trilateral subrogation. In this case we have another speaking definition, which makes clear the presence of three actors in the contract. Specifically, we talk about the customer, the surrogate bank and the surrogate bank.
Unlike the bilateral subrogation, this type of contract provides for the stipulation of a single notarial deed, which contains specifications regarding the new loan contract, the receipt for the extinction of the original mortgage and the commitment to maintain the mortgage.
Alternatives to the subrogation: replacement and renegotiation
Wondering what the mortgage subrogation is not enough if you want to have clear ideas about all the solutions to improve the sustainability of the plan. It is also necessary to read up on the replacement, which provides for the cancellation of the mortgage and the request for a new loan.
In this circumstance it is necessary to pay the appraisal and investigation costs, but there is the possibility of redefining the conditions of the amortization plan from scratch.
The renegotiation, however, allows you to improve the repayment plan without having to change banks. You can intervene on the spread, on the type of rate, on the duration of the loan. Introduced with the 2008 Finance Bill, it is easily granted by banks, which have an interest both in not losing valuable customers and in avoiding mortgage execution in the event of customers with payment problems.