Switching your mortgage to another bank (subrogación)

In Spain, subrogación means replacing one party to the mortgage loan without cancelling it or signing another. It can be lender substitution, moving the loan to another bank under Law 2/1994, or debtor substitution, taking over the seller's mortgage under art. 118 of the Spanish Mortgage Act.

What is subrogación and what types are there?

Subrogación changes the lender or the debtor without creating a mortgage from scratch. Although the word is the same, it helps to separate the two cases from the outset, because the rules, costs and risks differ:

• Lender substitution (switching bank). The borrower stays the same; what changes is the lender. A new bank "pays off" your loan to the old bank and takes over its position, on the terms you have agreed with it. It is governed by Law 2/1994 of 30 March, on the substitution and modification of mortgage loans.
• Debtor substitution (taking over the seller's mortgage). The loan and the bank do not change; what changes is who owes. Whoever buys a mortgaged home steps into the seller's place and keeps paying that same mortgage. Its legal basis is Article 118 of the Spanish Mortgage Act.

The first is the typical operation for someone who wants to lower their instalment or move from variable to fixed without opening a mortgage from scratch. The second appears mostly in new-build purchases (taking over the developer's mortgage) or resales with an outstanding loan. Most of this guide covers lender substitution; debtor substitution has its own section below.

How does switching bank work step by step?

Switching bank follows the procedure in Article 2 of Law 2/1994 when the loan was taken out by public deed. As worded by Royal Decree-law 19/2022 of 22 November, the steps are these:

1. Binding offer. The bank willing to take over presents you with a binding offer setting out the financial terms of the new loan, plus an information document on the costs of the substitution, including the maximum legal limits on the fee the old bank may charge.
2. Request and certification within 7 days. If you accept the offer, you authorise the new bank to notify the old one and request a certificate of the outstanding amount of the loan. The old bank must issue it within a maximum of seven calendar days.
3. Right to counter within 15 days. Once the certificate is issued, the old bank may block ("enervar") the substitution if, within the following fifteen calendar days, it formalises a modifying novation with you — that is, it matches or improves the offer. If it does not, the substitution proceeds.
4. Formalisation and payment. It is enough for the incoming bank to declare in the deed that it has paid the old one the certified amount (outstanding capital, interest and accrued fees), attaching the proof of the transaction. The law is emphatic: the old bank cannot refuse the payment.

That safeguard in Article 2 is the crux of the operation: the original lender cannot trap the client by refusing to be paid; its only defence is to improve its terms within the counter-offer window.

What compensation may the old bank charge?

The old bank may charge compensation for the early repayment triggered by the substitution, with the caps in Article 23 for loans within Law 5/2019 (LCCI). Those caps are always further limited by the lender's actual financial loss (the negative difference between the outstanding capital and the market value of the loan, calculated in proportion to the capital repaid):

On a variable rate, the first two cases are mutually exclusive: the deed agrees one scheme or the other (0.25% over 3 years or 0.15% over 5 years), not both at once. The 0.05% case is the one that matters to anyone switching to move from a variable mortgage to a fixed one: that cap was introduced by Royal Decree-law 19/2022; Royal Decree-law 8/2023 then merely extended the case to mixed mortgages with an initial fixed period of at least 3 years, keeping the same percentage.

Because the compensation depends on your interest rate, the age of the loan and the actual financial loss, the only reliable way to know the amount is to request it in writing from your bank and weigh it against the saving the new offer promises. The guide on repaying your mortgage early details how these early-repayment compensations work.

What taxes and fees apply to the substitution?

Lender substitution benefits from AJD exemption and reduced fees, a favourable tax and fee regime designed precisely so that switching bank is not prohibitive:

• AJD exemption (art. 7 of Law 2/1994). The deed documenting the substitution is exempt from the graduated rate of AJD (stamp duty on notarial documents). The text does not distinguish by interest rate, amount or autonomous region.
• Reduced fees (art. 8 of Law 2/1994). Notary fees are calculated as a "document without a stated value"; registry fees are calculated on the outstanding capital with a 90% reduction.
• Cost split and proportional reimbursement (art. 14.1.e of the LCCI). Article 2 of Law 2/1994 refers to the cost split in Article 14.1.e) of Law 5/2019. That article also provides a specific rule: when a substitution takes place, the new bank (incoming) must reimburse the old bank (outgoing) the proportional part of the tax (AJD) and the costs that fell to it when the loan was set up. It is an adjustment between banks that does not fall on the client.

These items may be joined by the property valuation (tasación), which the new bank may require to assess the security. The general split of setup costs is explained in the guide on mortgage costs.

Is my mortgage older than 2019?

If an older mortgage is substituted or novated after 16 June 2019, Law 5/2019 applies to that operation. As a general rule, Law 5/2019 does not apply to loans signed before it came into force, but its first transitional provision introduces two points that matter when switching:

• Substitution "activates" the LCCI. If a pre-2019 loan is subject to substitution or novation after that date, the provisions of Law 5/2019 begin to apply to that operation, and the lender must inform the borrower (art. 14) of what changes compared with what was initially agreed.
• The right to move to a fixed rate is universal. The right of repayment with the cap of Article 23.6 (0.05% during the first 3 years, 0% thereafter) applies whatever the moment the contract was signed. It does not depend on there being a substitution or novation after 2019: it is a borrower's right that the first transitional provision recognises regardless of the date of the loan.

What happens when buying a home with a mortgage already in place?

Buying a home with a mortgage already in place may involve debtor substitution: you do not change bank; instead you become the new debtor of a mortgage that already exists on the home you buy. It is governed by Article 118 of the Spanish Mortgage Act.

The critical point is the bank's consent. If seller and buyer agree that the buyer takes over the personal debt, the seller is only released from that obligation if the creditor (the bank) gives its consent, express or tacit. Without that consent, the mortgage — as a charge on the property — passes with the property, but the personal obligation to pay continues to bind the seller. That is why the bank assesses your solvency as it would any new borrower and may accept or reject the substitution.

As for information and transparency, whoever takes over as debtor signs as a borrower for the purposes of the LCCI. Article 14 requires the lender or the credit intermediary to hand over the pre-contract documentation (including the FEIN, the Spanish binding offer document), and Article 15 imposes the prior notarial act of transparency before signing, in which the notary checks that the borrower has understood the terms. These duties fall on the lender and the intermediary, not on the seller as such.

When should you compare switching, novating or taking out a new mortgage?

Switching, novating and taking out a new mortgage are three different routes for trying to improve your mortgage. Switching bank through substitution is not the only way, so it is worth comparing it with novation (renegotiating with your own bank) and with cancelling and opening a new mortgage at another bank:

The table is indicative: the best option depends on the specific figures of each offer. Before deciding, compare the instalment and the APRC (TAE; commonly APR) of your loan with those of the new proposal. To understand why the APR is the figure that matters, see the guide on the difference between the nominal rate and the APR, and if you are torn between rate types, the one on a fixed or variable mortgage.

What practical steps help compare with the calculator?

To weigh up a lender substitution in an orderly way, ask for figures in writing, compare instalment and APR, and allow for the counter-offer. These are the steps:

1. Ask your bank for the exact outstanding capital and the compensation it would apply for early repayment (with its calculation).
2. Get the binding offer from the new bank, with its rate, its term and the information document on the costs of the substitution.
3. Compare instalment and APR before and after. Enter the outstanding capital, the remaining term and the rate of each scenario in the mortgage calculator to see the instalment and total cost of each option, and add the estimated compensation to the switching scenario.
4. Allow for the counter-offer: your current bank may respond within 15 days. Compare that improvement too if it arrives.

Hypothetical, illustrative example: if a variable-rate loan had €150,000 of capital left and the new offer lowered the rate, the instalment saving would have to be compared with the early-repayment compensation (up to the caps in the table) and with any costs not covered by the exemption. The figures are made up and only serve to show the method: use the calculator with your own real data to get the comparison for your case.

Frequently asked questions

What is the difference between lender and debtor substitution?

Lender substitution changes the bank that lends: a new bank pays the loan to the old bank and takes over its position under Law 2/1994. Debtor substitution changes the person who owes: whoever buys a mortgaged home takes over the seller's mortgage under art. 118 of the Spanish Mortgage Act.

Can the old bank stop the switch to another bank?

In lender substitution, the old bank must certify the debt within 7 calendar days and cannot refuse payment. It can only stop the operation if, within the 15 calendar days after the certificate is issued, it formalises with you a novation that matches or improves the new bank's offer.

Which reduced costs apply to the substitution?

The substitution deed is exempt from AJD under art. 7 of Law 2/1994. Article 8 also applies reduced fees: notary fees as a document without a stated value and registry fees on the outstanding capital with a 90% reduction. The property valuation requested by the new bank may be added.

What happens if I buy a home with the seller's mortgage?

Buying a home with the seller's mortgage is debtor substitution. The buyer becomes the borrower, but the seller is released from the personal obligation only if the bank consents to the substitution. Without that consent, the mortgage passes as a charge on the property and the personal debt still binds the seller.

Summary

• There are two substitutions: lender substitution (switching bank, Law 2/1994) and debtor substitution (taking over the seller's mortgage, art. 118 Mortgage Act).
• When switching bank, the old one must certify the debt within 7 days, may counter within 15 days through novation, and cannot refuse the payment (art. 2 Law 2/1994).
• The early-repayment compensation is capped by art. 23 LCCI (0.25%/0.15% on variable; 0.05% when moving to fixed; 2% and 1.5% on fixed), always limited by the actual financial loss. The 1% of art. 3 of Law 2/1994 remains in the law; its relationship with art. 23 is not expressly resolved.
• The substitution deed is exempt from AJD (art. 7) and has reduced fees (art. 8); between banks there is a proportional reimbursement of the AJD and setup costs (art. 14.1.e LCCI).
• The right to move from variable to fixed with the 0.05% cap applies whatever the date of the contract (first transitional provision of the LCCI).
• In debtor substitution, the seller is only released with the bank's consent; the buyer signs as a borrower and is entitled to the prior notarial act of transparency (art. 15).

Compare the instalment and the APR before and after switching

Official sources

• Law 2/1994 — substitution and modification of mortgage loans: arts. 2 (procedure), 3 (fee), 7 (AJD exemption) and 8 (fees) (BOE, consolidated text).
• Law 5/2019 (LCCI) — arts. 14 (transparency and cost split), 15 (notarial act), 23 (early repayment) and first transitional provision (BOE, consolidated text).
• Spanish Mortgage Act — art. 118 (sale of a mortgaged property and buyer's substitution) (BOE, consolidated text).
• Royal Decree-law 19/2022 — amends art. 2 of Law 2/1994 and the cap of art. 23.6 LCCI (0.05%) (BOE, consolidated text).

Notice: this guide and the calculator are for information and educational purposes. They are not financial, tax or legal advice, nor a loan offer. The amounts are indicative estimates and the tax and cost treatment may vary by autonomous region and date; always check the terms with your bank, the regional tax authority and, for specific cases, a professional. The lender's FEIN sets out the binding offer and the figures calculated under its conditions and assumptions; for variable-rate mortgages they may change later.