Within an economic context marked by rising interest rates and inflation, many families in Spain are looking for alternatives to obtain liquidity without having to sell their real estate assets. One of the most common options is to remortgage a home, a financial solution that allows them to leverage the accumulated value in the property.
In this article, you will find a guide explaining what remortgaging a home is, how it works, when it's advisable, the necessary requirements, and the alternatives available in the market this year.
Remortgaging a home involves applying for a new mortgage on a property that already has a previous mortgage, but has accumulated value or has been partially paid off. This allows the owner to obtain additional financing without having to sell the property.
Unlike a mortgage extension, remortgaging involves canceling the previous mortgage and replacing it with a new one, which generally has different terms, such as the term length, interest rate, or amount.
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You can obtain up to 80% of the home's appraisal value (depending on the bank), which allows you to finance various projects such as renovations, investments, or debt consolidation.
If interest rates have dropped since you took out your first mortgage, you might be able to secure a cheaper loan.
Unlike a personal loan, the money obtained from remortgaging has no usage restrictions, so you can allocate it to education, entrepreneurship, purchasing another property, etc.
Mortgages typically have terms of 20 to 30 years, which reduces the monthly payment compared to a short-term loan.
Remortgaging a home is a financial process that involves replacing an existing mortgage with a new one, typically to obtain more capital or improve the loan terms.
First, the property must be appraised. An independent appraiser (or one appointed by the bank) assesses the current value of the home. The cost of the appraisal ranges from 300 to 600 euros, depending on the property's location and size.
Next, an application and feasibility study are conducted, where the bank analyzes your financial profile (income, current debts, credit history) and determines the financing percentage, which is typically up to 80% of the appraised value.
The previous mortgage is canceled, settled with the new loan. Some banks charge an early repayment fee (between 0.5% and 2% of the outstanding balance).
Then, the new deed is signed before a notary, which is mandatory to formalize the new mortgage. It is then registered in the Property Registry, a process that takes 1 to 2 weeks to complete. Finally, the funds are disbursed when the bank releases them, and they can be used freely.
From Domoblock, we invite you to read our articles on: fixed-rate, variable-rate or hybrid mortgages.
Remortgaging involves canceling the original mortgage and taking out a new one with different terms. It allows you to negotiate longer terms, lower interest rates (if the market is favorable), or larger amounts. Its costs are higher due to notary, registration, and appraisal fees, but it's an ideal option if you're looking to radically change the terms of your loan.
Increasing a mortgage, on the other hand, involves increasing the borrowed capital under the same terms as the current mortgage. It does not require canceling the previous mortgage, making the process quicker and more economical. However, it has limitations, as the bank may deny it if your financial situation has worsened. It is more advisable for specific needs involving smaller amounts.
For projects over 50,000 euros, remortgaging is usually cheaper than a personal loan, as it has lower interest rates.
If your home has increased in value (for example: bought for 200,000 euros and now worth 300,000 euros), you can access more capital.
If rates have dropped since your first mortgage, you might be able to reduce your monthly payment.
Personal documentation is required, such as your ID (DNI), payslips from the last 3 months, and your income tax return.
For the property, information on the current mortgage is required, such as outstanding payments and terms, the official property appraisal, and a certificate of debts to verify there are no liens.
You need to define how much money you need and for what purpose, and calculate if you can afford a higher monthly payment.
It is recommended to request simulations from at least 3 institutions (BBVA, Santander, CaixaBank, digital banks), comparing the interest rate (fixed, variable, or mixed), fees (origination, early repayment), and the maximum term, which is usually limited to 30 years.
The bank will send an appraiser to value your home. If the value has increased, you will be able to access more money.
The last 3 months' pay stubs, income tax return, copies of the current mortgage, and a certificate of debts from the Property Registry are required.
The cost usually ranges from 1,000 to 2,500 euros, depending on the capital. Here, the previous mortgage is settled, and the new one is signed.
The bank then deposits the money into your account within 15 to 30 days.
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Associated costs include the appraisal: 300 to 600 euros; notary and Property Registry fees: 1,000 to 2,500 euros (depending on the capital); origination fee: 0.5 to 2% of the loan (for example: 1% of 200,000 euros is 2,000 euros); administrative agency fees: 300 to 800 euros; and early repayment fee (if applicable): 0.5 to 2% of the outstanding balance.
The estimated total usually ranges between 2,000 and 5,000 euros, depending on the bank and the value of the home.
The total debt increases and the repayment period is extended, possibly by up to 30 more years.
Associated costs like mandatory home insurance or floor clauses can increase the loan's cost.
If the mortgage isn't paid, the bank can initiate a foreclosure process.
If you opt for a variable rate, a rise in Euribor will increase your payments.
You can use online comparison tools like Kelisto or HelpMyCash and negotiate with banks.
A fixed rate offers greater security (e.g., 2.75%), while a variable rate involves risk or benefit depending on the Euribor.
Your monthly payment should not exceed 35% of your monthly income.
This is necessary to avoid abusive conditions, such as hidden fees or early repayment penalties.
A professional can help you choose the best option.
Useful for smaller amounts (up to 50,000 euros), but with higher interest rates.
Allows you to receive a monthly income without selling your home.
If you need liquidity and don't want to take on more debt.
Up to 80% of the appraisal value.
There's no legal limit, but each bank will assess your creditworthiness.
Yes, and it's usually simpler since there's no outstanding debt.
BBVA, Santander, CaixaBank, and EVO stand out for their competitive rates.
It depends on the bank, but they usually require a good credit history.
It depends on the amount needed; for over 50,000 euros, remortgaging is usually cheaper.
Between 3 and 6 weeks, depending on the bank's efficiency.
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Refinancing a home can be an excellent option for obtaining liquidity, but it requires a careful analysis of costs and risks. Compare offers, assess your repayment capacity, and consult with a financial advisor before deciding.
Josep Ramón Batalla, 54
Funded
100%
647.323,06 €
Target
647.323,06 €
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