Mortgages are one of the most used financial services when buying a property, we have always talked about how to get one at the best price.
But today we will talk about something else, another moment in the life of this type of loans.
The most anticipated moment of a mortgage is to pay the last installment.
However, many people are unaware that it will not be the last thing they have to do with the mortgage.
The mortgage does not end with the payment of the last installment.
There is one last step, take charge of the cancellation costs.
The banks do not usually give many explanations about these procedures, they simply ask for funds for them to take care of everything.
But, then … How much will it cost to cancel my mortgage?
Quiet, today in this article you can find out more thoroughly, we will tell you everything about this subject …
Have you finished paying the loan?
If you find yourself in the long-awaited moment of having finally settled the mortgage debt with the bank of your property.
You need to know what steps to take once the mortgage loan has been fully paid.
In Spain, the financial settlement does not mean the immediate cancellation of the mortgage charge.
To formally cancel your mortgage, you must follow a procedure in which the main parties participate: the creditor’s bank, the property owner, the notary and the Land Registry.
Although the bank plays the leading role in this procedure, and it must be the bank that issues the “approval” to follow the cancellation procedures.
All formalities must be carried out by the interested party.
In addition, for the property to be free of liens, the owner must pay the costs inherent to the cancellation procedure.
On this topic, we talk more in the cheap mortgage section of our website.
What are the costs of canceling a mortgage in Spain? What steps to follow to formally cancel my mortgage.
What does the cancellation of the mortgage mean?
The cancellation of mortgage usually means that the borrower has finished paying the loan initially requested.
It can be seen as an attractive transaction by the debtor since it means that you will not have more burden on your home.
Usually, the mortgage is canceled due to possible situations:
- Finalization of payments : It is when you have continuously paid your mortgage loan for certain years, and your debt has been paid with their respective interests.
- Early cancellation : It is when you have extra money, either because you have saved it, or because of the sale of said property. It can also happen that you inherit a property and it is mortgaged, you may want to cancel that mortgage or pay it life insurance, which allows you to return the loan amount before its completion.
- Cancellation by change of bank : It is when you have decided to change the mortgage loan from one entity to another, because they have offered you better conditions and less interest.
These are the possible situations for a mortgage to be canceled.
Title of property that cancels the mortgage
Make sure the bank signs the property title that cancels the mortgage.
After the settlement of the debt with your bank, there is no reason to hold a charge on your property, which may in some way damage your interests in the future, such as in the case you decide to sell the property.
Keep in mind that the economic cancellation of the loan does not mean an automatic cancellation of the mortgage on your house, and therefore does not imply the elimination of the mortgage in the Land Registry where your property is registered.
How to formally cancel a mortgage on a property?
To formally complete a mortgage loan on your home, you must follow certain steps that are essential at all times.
Pay attention to these four steps, each of them is very important and you must do them in the same order, as I tell you, so you can finish your mortgage early so that you do not have problems.
Contact the bank
The first step is to contact the bank that granted your mortgage, communicating your intention to formally cancel the mortgage in the registry.
Thus, the bank will begin with the necessary procedures to carry out the cancellation and release of the property.
Sign public deed of cancellation
The bank must go to the Notary where the representatives of the bank must sign a public deed of cancellation certifying the cancellation of the mortgage.
This will end your relationship with the bank, but still, the property would not be released.
Once the public deed of cancellation has been signed, the interested party must pay the tax on the corresponding cancellation in the Tax Authority of the corresponding Autonomous Community, as exempt from the Symbol Tax, within 30 days of its issuance.
Submit the public deed in the property registry
Once the tax is settled, you must present the public deed in the property register as appropriate to eliminate the charge, so that the mortgage is canceled.
Now if your property will be free and you can sell it or do with it what you need without giving accounts to the bank.
These are the steps that you must follow, in case you want to save the administrative expenses or the expenses that the bank asks for.
As you can see they are not so complicated to do, so you can do it yourself.
How much does it cost to pay off a mortgage?
The expenses that must be paid when paying off a mortgage are the following: Let’s take as an example a variable mortgage of 200,000 euros.
The cancellation costs of this mortgage would be the following:
- Cancellation fee (0.50%): the cost could reach up to 1,000 euros
- Notary: the approximate cost is about 90 euros
- Registration of the property: the cost is 24 euros
- Management: with about 120 euros this expense is solved
So the total to pay summary between 300 euros and 1300 euros.
We are going to break down the cancellation fees
Being clear about the expenses that we have to face when we decide to cancel our mortgage is important.
Many users do not know that it is not simply to finish paying their mortgage, there are other expenses to cope with after that.
Let’s see the most important, take good note of each of them so you will not be surprised when you cancel your mortgage.
Commission for cancellation
The cost of this commission will depend on the capital to be amortized.
For variable mortgages, like the one in the previous example, this commission is between 0.25% and 0.50%.
It must be borne in mind that, if the last payment of the fixed-rate mortgage is made before the anticipated date, a risk compensation commission will have to be paid by the interest rate.
Zero debt certificate
This document states that we have settled our debt with the bank, as a rule, it is usually free, but in some cases, banks have charged for their processing.
Through Royal Decree-law 18/2012, since May 11, 2012, the fees of notaries are at a minimum of 90 euros.
The property registration
This expense usually does not exceed 24 euros.
This will always depend on the autonomous community where your property is registered.
Although the rates are not regulated, the cost for carrying out this procedure is usually around 120 euros.
This will also depend very much on whether you have a fixed manager or it is a sporadic job.
Learn step by step all the procedures and costs involved in canceling the mortgage you have contracted. Click to tweet
What banks hide about cancellation fees
We do not pretend to be against the banks, we only intend to say that the mortgaged have their rights and that sometimes the bank is “forgotten” to respect them.
For that we are here, to protect the consumer and assert their rights, we like to give all the information.
Perhaps an example of what we want to say is what happened with the soil clauses, thousands of users were affected and it took years to recover the money unfairly charged.
Let’s explain 3 things you probably did not know about canceling a mortgage.
- We have the right to be able to manage our cancellation expenses and not leave them to the bank, in this way we could save some money.
- We can request the bank before making the payment of the last installment that you disaggregate and specify what the cancellation expenses will be and how much they will cost us. This way we will avoid taking a surprise when it comes to dealing with the cancellation.
- Prices vary depending on whether a mortgage loan or a mortgage loan.
Ways of not paying the fees of cancellation of a mortgage
From the blog of this page, we have always talked about what we can do to improve our economy.
In this case, one of these ways is not to pay cancellation fees on our mortgage.
If we want to avoid paying mortgage cancellation expenses we have two options, novation, and subrogation.
The novation of the mortgage allows us to negotiate with our bank some conditions of the mortgage contract, such as, for example:
The term of amortization of the mortgage
- Increase capital
- Add headlines
- Modify the interest
- Remove abusive clauses
For this type of situation, it is very important to understand the contract you sign at the beginning, as this way you will avoid signing abusive clauses. As I explain here .
In the event that our bank did not want to modify some of the conditions, we have the other option.
Subrogation of the mortgage is to change it from a bank. So we can change:
- The interest rate and the benchmark
- Add or remove linked products
- Remove commissions
- Remove abusive clauses
The aforementioned procedures do not correspond to the bank.
These must be done by you, to ensure that your property is free of charges and also you can save the money that the bank asks you to do it.
I hope information about bill consolidation will help you to know a little more how to consolidate payday loans.
So know what it takes to pay the last installment of the mortgage, so you do not have any scare.
And not only be in knowledge, but you can negotiate the conditions or find another bank with which to finish paying the mortgage, with the conditions that you want.
One of the most important things before applying for a mortgage is to know which is best for you, a fixed or variable mortgage, if you have not read this article yet, I invite you to read it.