It’s time to choose the best financing for the purchase of a property. Welcome to our blog, which explores the world of real estate in circles. This week we are talking about the subrogation of the loan and especially why it is convenient to carry it out in these times of coronavirus. But let’s start by understanding what exactly loan subrogation is: also called mortgage loan portability, it represents the possibility of moving the loan contracted for the installment payment of real estate from one bank to another, with the aim of to obtain better contractual conditions. If until a few years ago the subrogation of the loan involved a series of costs, this is no longer the case. Thanks to the Bersani Law n. 40/2007, in fact, the portability of the mortgage loan has become a completely free operation, for which the banks cannot apply any type of commission: therefore, the subrogation can be carried out without additional costs, choosing the bank that offers the interest rates, more advantageous interest and avoiding paying fees for the expertise, the firm’s investigation or other. Now that we have understood what mortgage subrogation is, let’s move on to the news that will interest anyone who intends to take out a new loan for the purchase of a property. In general, applying for a loan from a bank has never been so advantageous from a financial point of view: going into debt in this period is very practical, because you can take advantage of the crisis due to the coronavirus and the economic crisis ensuing. But why buy a property for residential use or for investment right now? First, the cost of borrowing is currently extremely low. The fixed rates of a mortgage loan are generally linked to the Euris, also called IRS, which is the reference interbank rate used as an indexing parameter for fixed rate mortgage loans. This parameter, in twenty years, is today around 0.14% and that in thirty years around 0.08%. With the addition of the spread applied by the banks to determine the final cost of the loan, there is between 0.60% and 1% on the mortgage card. However, it must be considered that there are also negative aspects: first of all, there are still few mortgage applications. Second, delivery times are long, as banks and notaries have to deal with arrears. Finally, it is necessary to foresee an increase in investigations which end in the refusal of the request. But let us come to the subrogation of the mortgage. If there are few problems for those who intend to ask for it in this period of coronavirus, on the other hand this action must respect three conditions. The first condition is that the sum to be requested is high enough: for the operation to be attractive for the subrogating institution, the amount must be at least 70-80 thousand euros. The second hypothesis is that the confinement did not affect the family income. Finally, the third condition for requesting the subrogation of the mortgage of a property is that the ratio between the residual debt and the value of the house from which the mortgage would be transferred be reasonably low, that is, say less than 70%. At this point, let’s take a concrete example to understand what kind of savings we are talking about. A recent study shows that a subrogation of 140 thousand euros for a house worth 280 thousand euros today costs between 0.6% and 0.7% at the most advantageous fixed rates on the market. What does it mean? That if you have a 1% mortgage in progress, the savings are €18.60 per month. If the loan is at 1.5%, the drop in the monthly mortgage payment goes to 50.24 euros per month, which becomes 82.96 euros with a current mortgage rate of 2%. To conclude the article of our blog, we therefore suggest that you take advantage of the positive economic situation which allows you in this period to take out a loan or to subrogate the mortgage of a property on extremely advantageous conditions. But at the same time, we can only advise you to contact an expert and competent real estate agency, which knows the world of mortgages well and will be able to offer you the one that best suits your needs and your ability to buy.
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