The Spanish word Novación refers to a public document in which mortgage terms have been modified.

Generally it is a good idea to request the renegotiation of your mortgage contract if it is unfavourable compared to market conditions. For example if you are paying a fixed mortgage at a higher rate and interest rates fall it may be in your interests to negotiate modifications to your contract with your mortgage lender. Once this has taken place you must go with your new contract (public document) to a notary to get it signed. It is also possible (but expensive) to change from one mortgage lenders to another get more favourable mortgage terms.

Renegotiation is the simplest way of getting better mortgage terms. It consists in meeting with your mortgage lender (bank or building society) and negotiating some modifications to your mortgage such as a lower interest rate, changing from a fixed to a variable interest rate or the other way round, extending the term of the mortgage contract, modifying how the interest is calculated or changing the index used to calculate the interest.

If you are unhappy with the terms of your current mortgage, bear in mind that changing your mortgage from one Spanish bank to another is generally a very expensive business, and banks are reluctant to let a client with a mortgage go. Most banks include a clause in the mortgage contract specifying a penalty (usually 1% of the loan) to be paid by clients who suddenly pay off the total mortgage amount.

On the other hand, by law, Spanish banks must make a written offer to any potential mortgage client. So one option is to go to a bank offering more competitive rates, get a formal offer, and then go back to your own bank, show your bank rep the alternative offer, and ask him or her to match it.