When we buy a house, most of us are aware that a sort of long countdown begins until we conclude all outstanding payments with the bank.
For this moment to arrive, there are usually two possible situations. Either we are able to repay the remaining capital of the loan or we conclude the loan payments.
In our blog we explain the different scenarios and the possible requirements that must be met in each of them.
Cancellation due to the end of the term:
This is the most common way of cancelling a mortgage and it takes place when the different payments agreed with the bank are finished.
However, we must take into account that the bank must issue a certificate that accredits the end of the mortgage but that we must, in addition, proceed to communicate the cancellation of the mortgage in the registry.
Early cancellation of the mortgage:
As its name suggests, early cancellation occurs when the outstanding capital is amortised before the end of the mortgage term.
The two most common cases in which this option is chosen are the following:
- Having enough money to be able to repay the outstanding loan with the bank. When we have enough money to pay the capital that remains to be repaid.
- Sale of the mortgaged property.
In both cases, it is necessary to ask the bank for a document accrediting the outstanding balance and to pay it within a foreseen margin. In the case of the sale of the property, this is usually done by the debt collector.
Once the payment has been made, the bank must issue a certificate of cancellation of the mortgage and draw up a notarial document accrediting this and present it to the registry.
We should also be aware that many banks include in many mortgage contracts a charge for which we must pay a commission in the event of early cancellation.
What are the costs of mortgage cancellation?
When we are about to cancel a mortgage, in any of the two possible ways, we must take into account that this process also entails some expenses due to the different steps that we must take.
These costs are:
- Notary and registry fees: as is logical, the fees related to the cancellation of mortgages are regulated by law and their cost tends to vary depending on the amount of the mortgage.
- Administration costs: many times we have to resort to an agency to help us with all the formalities and procedures. In this case there is no legislation in this respect, so each agency can charge the fees they deem appropriate.
We should also be aware that many banks include in many mortgage contracts an expense for which we must pay a fee in the case of early cancellation.
At MAM Solicitors we have over 30 years of experience in helping our clients.
If you need any kind of advice on this procedure, do not hesitate to contact us and our specialists will help you with everything you need.