Mortgage assumption in Spain: how a buyer takes over the seller’s existing home loan

When a Spanish property is sold with a mortgage still outstanding, the buyer can sometimes take over that loan instead of arranging a new one. This is called subrogacion deudor (change of debtor), and it requires the bank’s consent under Article 1205 of the Spanish Civil Code and Article 118 of the Mortgage Law. The assumed loan carries over at its existing rate, term and balance, which can be attractive when current market rates are higher than the seller’s original rate. The tax treatment is not what most buyers expect: ITP is paid on the full property value, not the price minus the assumed debt, because Article 10.1 of the consolidated ITP law (RDL 1/1993) explicitly excludes debts from the deductible base even when secured by mortgage.

What is subrogacion deudor and when does it apply?

Subrogacion deudor is a contractual modification of a mortgage that substitutes the original borrower with a new one. The Banco de España defines it as a modification “mediante la cual se cambia el titular del préstamo”, replacing the current debtor, always with the bank’s express or tacit authorisation, so that the new borrower assumes the obligations and rights of the original debtor. It is most commonly used in two scenarios: buying a newly built home where the developer’s mortgage is still in place, and buying a resale where the seller’s mortgage has terms the buyer finds favourable.

The legal basis is Article 1205 of the Civil Code, which states that “la novación, que consiste en sustituirse un nuevo deudor en lugar del primitivo, puede hacerse sin el conocimiento de éste, pero no sin el consentimiento del acreedor.” The creditor, here the bank, must agree. Article 118 of the Mortgage Law (Ley Hipotecaria) adds the property-specific layer: when a mortgaged property is sold and the parties agree that the buyer will subrogate into both the mortgage liability and the personal obligation it secures, the seller is released only if the creditor consents. If the bank does not consent, the seller remains personally liable for the debt.

In practice, the buyer applies to the seller’s bank. The bank runs a full affordability assessment on the new debtor, checking income, residency status, credit history and the current loan-to-value ratio. If the bank approves, the subrogation is formalised in a single notarial deed (escritura de subrogacion) alongside the purchase deed, or in a separate deed if the sale and the assumption are timed differently.

What mortgage terms carry over and what can be changed?

A simple subrogacion deudor carries over every existing term of the mortgage unchanged: the interest rate (fixed, variable or mixed), the remaining term, the outstanding balance, the repayment system, and any associated insurance or linked products. The Banco de España’s guidance on mortgage novation confirms that the subrogation deudor can be “simple, en la que permanecen vigentes todas las condiciones de la operación en vigor, o con novación modificativa de las condiciones financieras del préstamo.”

If the buyer wants to modify any condition, the rate, the term, or the repayment method, that requires a separate novation under Article 4 of Ley 2/1994. The novation is a distinct legal act from the subrogation and may carry its own costs. A novation that changes the interest rate or the term benefits from reduced notary and registry fees and is exempt from AJD under Article 7 of Ley 2/1994, but only for those specific modifications. A novation that adds guarantees or changes the repayment system does not benefit from the same exemptions.

The practical implication for buyers in 2026, when Euribor has stabilised but fixed rates remain above the historic lows of 2021 to 2022, is that a seller’s mortgage originated in the low-rate years can carry a meaningfully lower rate than what a new mortgage would offer today. That is the core financial rationale for assuming rather than refinancing.

How much ITP do you pay when you assume the seller’s mortgage?

The ITP taxable base is the full value of the property, not the purchase price minus the assumed mortgage balance. This is the single most misunderstood aspect of mortgage assumption in Spain. Article 10.1 of RDL 1/1993 (the consolidated ITP and AJD law) states explicitly: “La base imponible está constituida por el valor del bien transmitido… Únicamente serán deducibles las cargas que disminuyan el valor de los bienes, pero no las deudas aunque estén garantizadas con prenda o hipoteca.”

In other words, debts, including mortgage debts secured on the property, are not deductible from the ITP base. Only “cargas” (encumbrances that reduce the property’s value, such as a usufruct or a real right of use) are deductible. A mortgage is a debt, not a carga in this sense, so it does not reduce the ITP you owe. The base imponible is the higher of the valor de referencia de catastro, the declared value, or the market value, per Article 10.2.

Scenario	Property value	Outstanding mortgage	ITP base (7 per cent Andalusia)
Cash purchase	EUR 400,000	none	EUR 400,000
New mortgage	EUR 400,000	none (old mortgage cancelled)	EUR 400,000
Mortgage assumption	EUR 400,000	EUR 150,000 assumed	EUR 400,000 (not EUR 250,000)

The buyer pays ITP at the applicable regional rate (7 per cent in Andalusia for resale properties) on the full EUR 400,000, regardless of whether they assume the seller’s EUR 150,000 mortgage or take a new loan. The assumed debt does not reduce the tax. This is confirmed by the statutory text of RDL 1/1993 Article 10.1, which makes no exception for assumed mortgage debt.

A related but distinct tax point: the subrogacion deudor itself does not trigger the cuota gradual de AJD (the notarial documents tax). DGT resolution V0745-25, of 28 April 2025, confirmed that a mortgage subrogation by the buyer in a property sale is not subject to AJD, because it causes a single registry inscription with the sale and does not constitute a separate inscribable act. This is the long-standing doctrine of the DGT, reaffirmed after the Tribunal Supremo’s 2020 ruling on a different scenario (extincion de condominio with express release of a co-debtor). The Garrigues tax blog notes that the DGT “sigue así su tradicional doctrina en relación con la no sujeción a AJD” for compraventas with subrogacion hipotecaria, distinguishing the TS ruling as a separate factual scenario.

What does the bank charge for a subrogacion deudor?

The bank may charge a commission for the subrogacion deudor, as the Banco de España confirms: “El banco nos podrá cobrar una comisión por los trámites que implique esta modificación.” The commission is typically agreed in the original mortgage contract. Unlike the early repayment commission on a subrogacion acreedor (changing banks), which is capped by Article 3 of Ley 2/1994 and Article 23 of Ley 5/2019, the subrogacion deudor commission is not subject to a specific statutory cap for fixed-rate mortgages. For variable-rate mortgages, the caps under Article 23 of Ley 5/2019 apply to early repayment, but a subrogacion deudor is a novation, not an early repayment, so the commission structure differs.

If the subrogacion deudor is combined with a novation that modifies the interest rate or the term, the novation commission for a term extension is capped at 0.1 per cent of the outstanding capital under Article 4 of Ley 2/1994. A rate modification has no statutory commission cap, though the bank must comply with the transparency requirements of Ley 5/2019.

The practical advice is to request the bank’s commission schedule before committing to the assumption, and to compare the total cost (commission plus notary and registry fees for the subrogacion deed) against the cost of a new mortgage (AJD on the mortgage deed plus arrangement fee). In a high-rate environment, the interest savings from assuming a lower-rate mortgage usually outweigh the subrogation commission.

How does the subrogacion deudor compare to a new mortgage or cash purchase?

Feature	Mortgage assumption (subrogacion deudor)	New mortgage	Cash purchase
Interest rate	Seller’s existing rate (may be lower)	Current market rate	Not applicable
ITP base	Full property value	Full property value	Full property value
AJD on mortgage deed	Not triggered (DGT V0745-25)	Yes, on the new mortgage deed	Not applicable
Bank affordability check	Yes, on new debtor	Yes, on new borrower	No
Notary deed	Subrogacion deed plus purchase deed	Mortgage deed plus purchase deed	Purchase deed only
Seller released from debt	Yes, if bank consents	Yes, mortgage cancelled at notary	Yes, mortgage cancelled at notary
Timeline	Bank-dependent, can take weeks	Bank-dependent, can take weeks	Notary date only
Best when	Seller’s rate is below market	Current rates are competitive	Buyer has liquidity

The table shows that the ITP cost is identical across all three scenarios, because ITP is always on the full property value. The savings from mortgage assumption come from the interest rate differential and the avoidance of AJD on a new mortgage deed, not from a reduced ITP base. Buyers who assume a mortgage expecting to pay less ITP are making a common error that the statutory text of Article 10.1 RDL 1/1993 directly contradicts.

What is the notary and registry process for the subrogacion?

The subrogacion deudor is formalised in a public deed before a notary. The deed must identify the original mortgage (date, notary, registry data), the outstanding balance, the new debtor, and the bank’s consent. Under Article 4 of Ley 2/1994, the escritura de subrogacion is then presented to the Registro de la Propiedad for inscription of the change of debtor. The Banco de España notes that “cualquier modificación de las condiciones inicialmente pactadas de tu hipoteca, deberá formalizarse en escritura pública e inscribirse en el Registro de la Propiedad.”

If the subrogation is done as part of the purchase, the notary can formalise both the sale and the subrogation in a single session, though they are separate deeds. The seller’s bank must provide a certification of the outstanding debt (certificacion del importe del débito) so the buyer knows exactly what they are assuming. The bank’s consent can be express (a signed authorisation) or tacit (implied from conduct, such as processing the application without objection), though express consent is standard practice.

If the subrogation is combined with a novation to modify conditions, the novation must comply with the information requirements of Ley 5/2019, which obliges the lender to inform the borrower of all modified terms relative to the original contract. The cost distribution under Article 14 of Ley 5/2019 applies: the bank pays the notary fees for the novation deed, the notary copy, the registry inscription and the document management, while the borrower pays the appraisal (if required) and the copies they request.

What happens if the bank refuses the subrogacion?

The bank is not legally required to accept the new debtor. Article 1205 of the Civil Code makes the creditor’s consent a prerequisite for the novation by debtor substitution. If the bank’s affordability assessment finds the buyer does not meet its lending criteria, for income, residency, or loan-to-value reasons, it will refuse the subrogation. In that case, the buyer has three options: apply for a new mortgage with the same or a different bank, pay cash and cancel the seller’s mortgage at notary, or walk away from the deal under the terms of the arras contract.

If the buyer walks away, the arras contract governs the consequences: if the buyer withdraws, they lose the deposit; if the seller withdraws, they return double. If the bank’s refusal was unforeseen and the contract was conditional on the subrogation, the buyer may recover the deposit, but this depends on the exact contract wording. This is why buyers should confirm the bank’s preliminary approval of the subrogation before signing the arras, not after.

A buyer whose bank refuses the subrogation but who still wants the property at the same price will need a new mortgage. The new mortgage will carry current market rates, which may erode the financial rationale for the purchase. This is the key risk of building a purchase strategy around mortgage assumption: the deal’s economics depend on the bank’s approval, which is not guaranteed.

How does the subrogacion deudor interact with the broader purchase process?

The subrogacion deudor fits into the standard Spanish property purchase process as an alternative to the mortgage application step. The buyer still needs an NIE, a Spanish bank account, an independent lawyer, and the full due diligence on the property. The property valuation is less critical for the buyer if they are not taking a new mortgage, but the bank will still verify that the loan-to-value ratio is within its tolerance, typically requiring the outstanding balance to be no more than 70 to 80 per cent of the property’s current value.

If the outstanding mortgage balance exceeds the bank’s LTV threshold for the new debtor, the bank may require the buyer to make a partial repayment (amortizacion parcial) to bring the LTV into range, or to provide additional guarantees. This is a practical barrier that can make mortgage assumption unviable for properties where the mortgage was originated at a high LTV and property values have not appreciated sufficiently.

The selling property guide notes that a seller with an outstanding mortgage can either cancel it at notary using the buyer’s purchase funds, or offer the buyer the option of subrogacion deudor. The latter is only attractive to the seller if it accelerates the sale or if the buyer is willing to pay a premium for the assumable low-rate mortgage. For a seller looking to surrender the property to the bank instead, the subrogacion deudor is not the relevant mechanism; dacion en pago is a distinct process that extinguishes the debt by transferring the property to the bank, not to a buyer.

This guide is general information, not legal or tax advice. Rules change and individual circumstances differ. Verify current requirements with an independent lawyer (abogado) or tax advisor (gestor/asesor fiscal) before acting.