How to limit damages on mortgages already open and which type to choose in case of imminent opening
Given the current situation of continuous growth to limit further spending in the future it is important to act quickly. Those who have opened a variable rate mortgage in previous years are finding themselves paying exorbitant amounts that continue to increase the monthly installments.
In this case there are two ‘solutions’, which are not solutions because the increase has now been fixed and therefore you will find yourself paying more than you should in any case, but you can use as buffer strategies to avoid further increases.
- On the one hand the subrogation, or switch from a floating rate to a fixed rate or mixed rate. In this case you will obviously pay more than the ideal cost agreed upon signing the loan contract, but the installment will be definitively blocked;
- Or there is the possibility of renegotiate the loan. In this case, unlike the subrogation which requires the transfer from one bank circuit to another, renegotiation changes the mortgage but with the same bank, trying to propose a switch from floating rate to fixed rate. In this case there is a need for certain requirements but in general in 2023 it is very probable that the banking circuit is consenting in most cases.
For those who need to apply for a mortgage right now, the advice is to choose a fixed-rate mortgage but not to extend the number of installments too much because you would still be paying a large extra sum due to current rates.