After a long time of pay fees to the bank the time has to come cancel the mortgage, of course, the facts of ending the your mortgage payments They will represent a great later saving for your economy, in your monthly expenses and worries. However, there is bad news in this, unfortunately this last step before we can totally dissociate ourselves from the banking institution and free ourselves from this economic burden that was with us for so many years will have to generate a series of extra expenses. This due to the process that is required to cancel your mortgage.
In this article you can find information that will help you when the time comes when you have to cancel your mortgage. To begin with, we need to know what exactly the mortgage cancellation process is, and why it is necessary.
What is it and why is it so important to cancel the mortgage?
This is that the mortgage registration cancellation must be reflected in the Property registration as canceled, and that therefore this debt is no longer outstanding, so it does not exist. This is not a mandatory procedure, but it will be very necessary to do so in the event that in the future you want to sell this home or request another new loan from the bank.
Once you get to the time of cancel the mortgage, you will be presented with 2 different options:
- The bank takes care of all the formalities: In this option, the bank will hire an agency, which will require a provision fund to be able to carry out all these procedures, which will have an approximate total cost of around 200 euros.
- Carry out all the procedures on your own: If you have a little time, and you consider it important to save those 200 euros, you can carry out all these steps on your own by going to the different corresponding places and doing all the necessary steps yourself.
In case you decide to carry out the second option, you must carry out a process that will also have some expenses, however, this process is not that complicated and you can easily do it with a little time and following these simple steps.
Another thing of the considerations that must be taken into account is that, if we do not carry out the cancellation of the mortgage in the Property RegistryThis would be canceled free of charge by the registry and the bank, but after 20 years. However, if we do not cancel the mortgage, we must also take into account that the property cannot be sold, nor can new loans be requested from the bank in the course of these 20 years, since it will be taken into account as if the mortgage was still there. current.
It is being, so to speak, the third optionIt is not at all the most recommended, nor advisable by any of the banks or professionals on the subject, however, it is a possible option and in a certain case it could be considerable.
So, already having all this information about the options and the ways to do cancellation of mortgage Let's move on to what steps we must follow to be able to cancel the mortgage on our own.
What steps must be followed to cancel the mortgage
• Pay at the bank:
The first step in this process is the go to the bank in which the mortgage has been contracted, a mortgage that can be paid in full, this in time and form to enter the cancellation process. What is going to be done is pay the outstanding amount of the mortgage, and pay the cancellation fee. This commission will depend on the capital that has been loaned by the bank, and can range between 0.25% and 0.50% of the total. After paying it, the bank must issue a zero debt certificate. (Some banks usually charge between 100 and 200 euros to deliver this document, but they should do it for free).
After issuing the zero debt certificate, just at that moment the bank may ask you for a provision of funds to carry out the entire process that follows; what is the notary, the records, going to the farm, etc. This is when the client is told that he has the possibility of having the bank take care of all the paperwork, and you must decide if you have the time to do it yourself, reject this offer and continue with the process that follows. to cancel your mortgage, as this can save you money considerably.
• Complete the paperwork:
Sometimes it is not advisable to leave the cancellation of registration in the hands of the bank management. Since the expense for their services can skyrocket and become very expensive, because these expenses are the most bulky of the process.
• Go to the notary:
Once having the zero debt certificate in your hands, you have to take it along with the mortgage deeds with a notary. At that time a cancellation public deed, and this must be signed by a representative of the bank; You do not have to worry about this as the notary will call you to sign. Nor is the presence of the client necessary, and as indicated by the Bank of Spain, banks should not charge anything for the transfer of the attorney. In addition to the fact that you can go to any notary, therefore, it is not necessary or mandatory to go to the same notary with whom the mortgage was signed.
• Go with the Treasury:
After having gone through the process of going to the bank and visiting the notary, you have to go to a corresponding delegation of the autonomous community to request the form of the Tax on Documented Legal Acts (mod. 600). Mortgage cancellations are subject to this tax, but are exempt from payment, with the exception of the price that must be paid for the form, which is around one euro. This process is very simple, but if you have doubts about how to implement it, the officials should tell you how to fill it out.
• Do not forget to go to the Property Registry:
When you already have the copy of the tax, along with the papers that were previously taken out, which are the bank papers, and the deeds of the notary, you have to go and get the Property Registry in order to be able to make the cancellation of the mortgage effective. This is not mandatory, since, after 20 years, the Registry cancels it automatically and at no cost, but if this last step is not done, it will be very difficult in the future to get another bank loan if it is not necessary. The cost of this registration may vary, in the case of notaries, Royal Decree-Law 18/2012 imposes a minimum that registrars must charge for this procedure. That is 24 euros, which are increasing depending on the amount of the mortgage.
• Get a Simple Note:
This procedure is not totally necessary, but, if you wish, it is used to verify that the mortgage has indeed been canceled. You can order one Simple note to verify that the charge for the mortgage no longer exists, The simple note is only informative and gives you, briefly, a paper support that the mortgage cancellation process has been completed. It can be obtained by email through the online platform of the Land Registry. This is billed directly to the user by the registrar that issues it, and the price of the Simple Note is around 9 euros per farm, as indicated by the College of Registrars.
Taking into account all the above we can realize that it is indeed necessary to make a series of expenses in order to be able to carry out the cancellation of the mortgage. But how much do we save by doing this process ourselves?
How much do credit institutions charge to cancel the mortgage?
The price varies between each banking institution, however, there are a series of common denominators among all of these:
- The certificate usually has a cost, which should not be charged, but banks do it anyway. This ranges between 100 and 200 euros.
- Hiring an agency is more than an artifice to try to charge the client for this very simple cancellation process, but what the agencies charge is a price of around 300 to 100 euros, depending on each bank. Which is a considerably higher price than what we would pay doing the process on our own.
They disguise all this, implying that this is what the whole process costs, along with the paperwork, certificates, notes and all the deeds that are necessary. But the truth is that, among all these papers necessary to carry out the cancellation process, only around 200 euros are spent, and the rest of the money that is requested as a provision, which is about 1000 or 1500 euros, it ends up being left by the bank, or the bank agency.