Subrogation

Switching mortgage lenders (subrogation) is a type of novation, i.e., an agreement through which the terms and conditions of a mortgage agreement are modified to change the person or company (personal or subject subrogation) or the asset subject of the contract (real or object subrogation). Whereas object subrogations (switching the mortgaged asset) are rare, subject subrogations are more practical. There are two types:

• The subrogation of the debtor or among individuals, which represents a change of debtor of the mortgage loan. This type of subrogation is common when a person purchases a home that is already mortgaged. The Bank will carry out a risk study in order to accept or turn down the application for subrogation of the new debtor.
• The subrogation of creditor or among companies, which represents a change of bank as a decision of the debtor of the mortgage loan. This basically consists of reaching an agreement with the bank to change the mortgage loan to another bank that can offer better conditions, such as advantages in the modification in the terms and conditions of the operation, in the amortization term, etc.