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When faced with rising interest rates or a sudden change in their financial situation, many mortgage holders consider renegotiation as their first lifeline. This involves an agreement with their bank to modify the terms of the original contract, such as the interest rate, term, or spread. However, this path is not always viable. The bank is under no legal obligation to accept a renegotiation request, often leaving the borrower in a position of uncertainty. Understanding the reasons for a potential refusal and knowing the available alternatives is crucial for managing your debt effectively, turning an obstacle into an opportunity to find more favorable terms.
This article explores in detail what to do when the bank refuses to renegotiate your mortgage. We will analyze the Italian and European regulatory context, the reasons that lead credit institutions to deny the modification, and, above all, the concrete solutions available to the consumer. From remortgaging to replacement, to the role of the Banking and Financial Ombudsman, we will provide a practical guide to navigate a complex landscape, with a special focus on the Mediterranean financial tradition and the innovations that are reshaping the relationship between customer and bank.
Mortgage renegotiation is a negotiation between two private parties and, as such, is based on a voluntary agreement. The credit institution is not legally obliged to modify an existing contract, except in specific cases provided for by temporary regulations, such as the option for certain categories of borrowers to switch from a variable to a fixed rate introduced by the 2023 Budget Law. The reasons for a refusal are mainly economic and prudential. The bank carefully assesses the client’s profile before granting a modification. Factors such as a history of irregular payments, even in the past, or a worsening of income and employment status can negatively influence the decision. A low credit score or the presence of other significant debts are warning signs for the institution.
Furthermore, the bank considers its own economic convenience. If the new conditions requested by the client, such as a sharp reduction in the spread, are not considered profitable, the request will likely be rejected. The stage of the amortization plan also plays a role: if the mortgage is nearing its end, most of the interest has already been repaid, making renegotiation less attractive for both parties. It is important to submit the request formally, via registered mail with return receipt, explaining your needs. This approach, which combines the tradition of formal communication with the innovation of proactive debt management, is the first step toward a constructive dialogue.
When dialogue with your own bank breaks down, the most effective and widespread solution is remortgaging, also known as mortgage portability. Introduced in Italy by the Bersani Law (Law 40/2007), this procedure allows you to transfer your loan to another credit institution that offers more advantageous conditions, at no cost to the client. The new bank covers all expenses, including notary and administrative fees, making the operation extremely convenient. It is a borrower’s right: the original bank cannot oppose the transfer of the contract.
Remortgaging allows you to change the type of rate (from variable to fixed or vice versa), the term of the repayment plan, and the applied spread, but not the amount of the outstanding debt. The latter must remain unchanged, as must the mortgage holders. The convenience of remortgaging is greatest in the early years of the amortization plan, the period when the largest share of interest is paid. Before proceeding, it is essential to carefully compare offers from different banks, perhaps using an online mortgage calculator to get a clear picture of the potential savings. Although the old bank cannot prevent the remortgage, the new one has the right to refuse the request after assessing the client’s creditworthiness.
If the goal is not only to improve the mortgage conditions but also to obtain additional liquidity, the right alternative is replacement. Unlike remortgaging, this operation consists of paying off the old loan and taking out a completely new one, even with a different credit institution. Replacement offers greater flexibility: it allows you to change not only the rate and term, but also the financed amount and even the contract holders. This option is ideal for those who, for example, need funds for a renovation or to consolidate other debts into a single, more manageable payment.
However, replacement involves costs. Being a new mortgage in every respect, it requires payment of processing fees, appraisal fees, notary costs for the new mortgage lien, and a possible penalty for early repayment of the old mortgage (if stipulated in the contract). It is therefore a choice that must be carefully considered, calculating the overall economic convenience. The bank, whether the old one or a new one, will evaluate the request as a new mortgage application, re-analyzing the income, the property value, and the applicant’s creditworthiness. For those who need flexibility and extra liquidity, replacement represents a powerful tool for personal financial innovation, although it requires a more structured approach than traditional renegotiation.
In the context of disputes with credit institutions, the borrower is not alone. A fundamental protection tool is the Arbitro Bancario Finanziario (ABF), or Banking and Financial Ombudsman, an independent and impartial body for the out-of-court resolution of disputes between clients and intermediaries. If you believe the bank has acted improperly, for example by not respecting contractual clauses that provided for the possibility of renegotiation, you can file a complaint. The procedure is streamlined, inexpensive (it requires a contribution of 20 euros, which is refunded if the complaint is upheld), and is conducted entirely online.
Before turning to the ABF, it is mandatory to have already submitted a written complaint to the bank and to have either not received a response within the prescribed time or received an unsatisfactory response. The ABF’s decisions do not have the same force as a court ruling, but if the intermediary does not comply with them, its non-compliance is made public, causing significant reputational damage. This represents a strong incentive for banks to comply. The ABF has handled numerous cases related to renegotiation and portability, affirming consumer rights and helping to create a more transparent and fair market. Turning to the ABF is a step that combines the tradition of protecting one’s rights with the innovation of an efficient and accessible dispute resolution system.
Facing a refusal of a mortgage renegotiation from your bank may seem like a dead end, but it actually opens up several opportunities. The financial market, though rooted in a traditional culture, now offers innovative and flexible tools for attentive consumers. The key is not to stop at the first “no,” but to get informed and act with awareness. Remortgaging is the most advantageous alternative for those seeking better conditions at no extra cost, a true borrower’s right that encourages competition among banks. For more complex needs, such as the need for additional liquidity or changing the mortgage holders, mortgage replacement proves to be a powerful, albeit more costly, solution.
It is essential to approach the management of your mortgage proactively, periodically evaluating market offers and comparing them with your own situation. Knowledge of options like remortgaging or renegotiation and awareness of your rights, including the possibility of recourse to the Banking and Financial Ombudsman, transform the borrower from a passive subject into the protagonist of their own financial choices. In a constantly evolving world, the ability to combine the prudence of tradition with the opportunities of innovation is the true winning strategy to ensure the sustainability of your debt and the financial serenity of your family.
If the bank refuses your renegotiation request, which it is entitled to do, the main alternative is remortgaging. This operation, also known as portability, allows you to transfer your mortgage to another bank that offers more advantageous conditions, such as a lower interest rate or a different term, at no cost. Your old bank cannot oppose the remortgage.
No, remortgaging is a free operation for the customer, as established by the Bersani Law of 2007. All costs, including notary, appraisal, and processing fees, are borne by the new bank. The only potential expense is a €35 tax for registration in the Land Registry, which, however, is often absorbed directly by the new bank.
Renegotiation is a modification of the contractual conditions (rate, term) that you negotiate directly with your current bank. Remortgaging, on the other hand, involves transferring the mortgage to a new credit institution. While the bank can refuse to renegotiate, it cannot oppose your decision to remortgage.
Yes, the new bank is not obliged to accept your remortgaging request. It will conduct a new assessment of your financial situation and the property. The request may be rejected if, for example, your income situation has worsened, the remaining mortgage amount is too low (less than €50,000), the property has lost value, or you are close to the end of the loan term.
Yes. An alternative is mortgage replacement, which consists of paying off the old loan and opening a new one, with the option of requesting additional liquidity. However, unlike remortgaging, it involves costs (notary, processing, etc.). In cases of temporary and proven financial difficulty (e.g., job loss), it is also possible to request the suspension of mortgage payments for a primary residence by accessing the Gasparrini Solidarity Fund for a maximum period of 18 months.