In recent months, the sharp rise of Euribor has sent daily values into new territory, reaching about 0.5% in the early days of June 2022. This surge pushed more homeowners with variable-rate mortgages to consider switching banks or seeking alternatives that fix their interest rate. The central question becomes what option offers the best overall outcome: continuation with a new plan, cancellation, or repayment through a different mortgage setup. When a lender counters a request with recourse, there is no need to start a fresh mortgage from scratch. In practical terms, this means avoiding initial setup fees and ongoing interest that typically accompany a new loan. Since the 2019 Mortgage Law reform, the primary costs are carried by the new agency rather than the borrower. The homebuyer would usually cover the costs of property valuation (about 425 euros) if required, plus a notary deed copy (around 250 euros) and any surrogacy-related fees, which vary by jurisdiction.
If the terms of the variable mortgage are changed by switching to another mortgage within the first three years, the commission can reach up to 0.25%. If this occurs within the first five years, the rate drops to 0.15%. If the fixed-rate terms are altered to another mortgage, the succession commission can be as high as 2% in the first ten years and up to 1.5% in the next ten years.
When considering cancellation, additional costs must be added. This includes the cancellation fee of the previous mortgage (roughly 400 euros) to cover the appraisal and notary copy costs mentioned above. Instead of paying a succession commission, the encumbrance must pay the Documented Legal Transactions Tax (IAJD) established by each autonomous community, along with an early depreciation commission that can reach 2% (depending on the amortized amount if the initial mortgage carries a fixed rate, or 0.25% if the rate is variable). This is often where the costs become most pronounced.
Banks prefer to cancel
Simone Colombelli, director of Mortgages at iAhorro, notes that cancellations occur more frequently than recourse in Spain because banks would rather avoid the recourse path. While many clients request a switch from variable to fixed rates, lenders frequently prefer cancelling the existing loan and issuing a new mortgage with a different financial institution so the property’s value remains intact.
In this sense, iAhorro’s mortgage chief highlights the challenges for those pursuing succession. When the economic difference between cancellation and succession is substantial for the consumer, financial institutions tend to favour cancelling and establishing a new mortgage rather than transferring the existing agreement. Even with similar commissions, total costs can rise.
2,000 Euros less for surrogacy
When total costs are calculated, pursuing succession can be up to 2,000 euros cheaper. For instance, cancelling a variable mortgage of 142,965 euros (the average mortgage amount reported by the National Statistics Institute for 2022) could incur around 2,862 euros, including appraisal costs and the IAJD, whereas switching to a mortgage with better terms might cost approximately 1,032 euros, plus the required processing and commission fees, totaling about 1,830 euros less. In both scenarios, the maximum commission adheres to current legislation.
If the same variable mortgage of 142,965 euros is converted to a fixed-rate mortgage, the bank’s maximum commission would be 0.15% of the remaining balance within the first three years of the loan. If the loan was signed more than three years ago, the 2019 reform typically makes such a change non-viable. Colombelli explains that switching from a variable to a fixed rate is easier and cheaper because the law encourages the consumer to seek greater financial stability. In this case, succession would cost about 889 euros, while cancellation could reach 2,862 euros, or 1,906 euros depending on the chosen path.