If you have a mortgage and wish to modify the initial conditions with which the loan was signed there are two options you should be aware of: subrogation and novation. They both have similarities to each other, but when it comes to modifying your mortgage it is vital to be aware of the important differences that separate them, so as to know which is right for you. So what are these differences?
What is the novation of a mortgage?
The novation of a mortgage is the modification of the initial conditions that were accepted when the mortgage was signed. Novation allows the mortgaged person to renegotiate the conditions of their mortgage, which in turn allows them to access more favorable conditions from an economic point of view. In order to carry out the novation of a mortgage, the bank must study the particular case and, only if it gives the go-ahead, the changes will be implemented.
Novations allow you to make modifications of the following type:
The amount of the mortgage pending: what this means in practice is that mortgage novations allow us to increase the capital loaned by the bank. In essence, this means extra liquidity for the mortgaged party.
Repayment term: mortgage novations can also be used to modify the mortgage contract in order to change the repayment term. That is to say, modifications regarding the installments in which the capital it has lent must be returned to the bank.
Interest rate: novations also allow changes to be made with respect to the interest rates set for the mortgage in question. For example, you can go from a variable interest rate to a fixed one.
Change of mortgage holder: Another change that the novation of a mortgage permits is to change the holder, or holders, of the mortgage. This option is very useful, for example, in the case of a divorce when one of the spouses is going to keep the house that is mortgaged.
What is a mortgage subrogation?
The subrogation of a mortgage also allows you to make changes with respect to the terms of the mortgage. However, in this case, the change allowed is very specific: subrogation allows us to change the mortgage from one entity to another (or to a new owner). In other words, the debt that we have contracted with a bank goes to another bank. From that moment, the payments related to the mortgage must be made to the new entity that has accepted the subrogation of the mortgage.
This can be useful in the event that, after comparing different mortgages, we have found another bank that offers us better conditions than ours. For example, offering lower interest rates than in the initial entity with which the mortgage is contracted.
In addition, it must be borne in mind that, depending on the case, there are two different types of subrogation:
Creditor subrogation: this is the type of subrogation that occurs when the mortgaged party changes their mortgage to another bank.
Subrogation of the debtor: this is the type of subrogation that occurs when the mortgage remains in the same bank but the owner changes; that is, the mortgage passes to someone else. For example, this is very common when a mortgaged home is sold and the buyer takes over the mortgage already contracted on said property.
What are the differences between subrogation and mortgage novation?
As you can see, both the novation and the subrogation of a mortgage will allow us to change the conditions of a mortgage already signed.
However, in the case of novation, these are modifications that are carried out internally. That is, the parties who negotiate the modifications are the bank and the mortgaged party.
On the contrary, in the case of subrogation, the modifications imply the collaboration of a third party that is external to the initial mortgage contract. That is, in addition to the initial bank and the mortgaged party, there will also be another bank or another individual, who will be the ones who will assume the subrogation of the mortgage.
What expenses are associated with a subrogation and a mortgage novation?
Currently, thanks to the mortgage law that came into force in June 2019, the expenses are assumed by the bank, so both subrogation and novation are procedures that do not usually have specific associated expenses.
However, it is true that some financial entities, as well as the particular situations of some applicants, may derive additional costs for the client. For this reason, the most advisable thing is to properly inform yourself of the expenses associated in each case with the specific bank with which you have contracted the mortgage.
How much does it cost to move in Spain in 2025?
One of the most common questions when preparing to move in Spain is: how much will it cost?
School holidays in Spain: 2025-2026 dates
As the 2025–2026 school year approaches, some regions in Spain have already started confirming their term dates. School calendars can be a bit of a minefield here, especially with each autonomous community setting its own schedule on top of the national holidays that everyone enjoys.
Spain vs. Portugal Cost of Living
If you're weighing up a move to southern Europe, Spain and Portugal are two of the most appealing destinations for expats and retirees alike.
Mortgage brokers in Spain: what they do, costs and key functions
One of the main challenges when purchasing a home is securing a mortgage that satisfies both your requirements and those of the lender. This process demands extensive documentation and clear evidence of financial standing, not only to obtain favourable terms but also to gain access to the mortgage market in the first place.
Mortgages in Spain for non-residents: your guide to buying a property with a Spanish mortgage
Are you a non-resident looking to buy property in Spain? Whether it’s a holiday home or an investment, understanding your mortgage options as a non-resident is essential before making a purchase. This guide explains how non-residents can secure a mortgage in Spain, typical lending conditions, and tips to improve your chances of approval.
Countdown to Spain-wide Cercanías travel pass for €20 a month
From 1 July, the Ministry of Transport and Sustainable Mobility will introduce free public transport for children under 15 and a nationwide commuter train pass for just €20 per month, covering all areas and towns in Spain. The scheme also includes reduced fares for other regular users and new measures to support cycling as a daily mode of transport.
