A mortgage debt is a long-term obligation, which can take between 5 and 20 years to settle. That is why it is convenient to know the different mechanisms that, over time, can help us improve the initially contracted conditions. One of them is the transfer of credit to another financial institution .
Can we transfer mortgage debt from one entity to another?
Yes. Some banks, clearing houses and credit unions offer this alternative, also known as mortgage portfolio purchase .
In simple terms, this operation consists in requesting a new housing loan to pay the existing one. Of course, it only makes sense to execute it if the new product offers better rates or more favorable conditions.
Reasons to transfer a mortgage debt to another bank
There are several reasons to think about this operation, but we can say that the transfer of the obligation is ideal when:
- Due to circumstances of force majeure, we cannot continue to comply with the timely payment of dividends and we need a lower fee, which can be achieved by extending the term of the loan.
- We acquire credit with a very high interest rate and market dynamics allow another financial institution to offer us much lower rates.
- The other entity gives us the same conditions as the bank where we initially contracted the mortgage debt, but offers additional benefits such as insurance, flexibility in payments, grace periods, months of non-payment, additional products, etc.
- Our economic conditions have improved and we can pay a higher dividend, which allows us to get out of debt in less time.
How to transfer mortgage debt to another entity
The first thing we should do is look for those financial institutions that offer this service. Then contact them and request information regarding the credit requirements and conditions they offer , in order to assess and look for the most appropriate option.
It is important to take into account the associated expenses, such as the value of insurance, notarial costs, registration in the conservator of real estate, the draft of the deed, etc. In this sense, the CAE plays a fundamental role.
In this way, we can have a global view of the total value of the operation and determine if it is really advantageous or not for our interests.
After finding an option whose requirements we meet and conditions are favorable, we must contact an executive of the entity.
Recall that it is a new loan application that must be submitted for study. Therefore, the advisor will require the necessary documents to evaluate our creditworthiness, such as payment receipts, income certifications, among others. We will also ask for documents associated with housing and mortgages, such as a photocopy of the deed, a copy of the registry at the Conservatory of Real Estate and a mortgage certificate.
It is likely that the transfer of the mortgage debt does not require a new study of securities or a new appraisal of the property. However, everything depends on the particular requirements of the financial institution and the specific conditions of the mortgage.