Novation and substitution
Novation and substitution - Nowadays, the increasing competition in the financial sector, encouraged enclosed by the entities online, and the biggest financial culture of the clients, does that the offer of mortgage loans is more and more diverse and flexible.
This way, it can happen that the interests that we are paying in our mortgage loan are perceptibly superior to those of market current. That's why we are provided with two options to renegotiate the conditions of the mortgage loan: to renegotiate the current conditions with our entity, the novation; or to move our loan to another entity that offers better conditions, the substitution.
The novation
The novation consists of renegotiating the loan with our entity and agreeing on a few progress in the conditions of our mortgage. It is possible to agree on a descent in the applicable interest rate or even to modify the way of calculating the interest. Also it is possible to agree, for example, to change a loan with fixed interests to a loan with variable interests, to modify the pay-off period or to change the index of reference that is applied.