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What do you have to do to cancel a mortgage?

Posted by Michel B. on 24/08/2019

The cancellation of a mortgage occurs when the last letter of the loan is paid. At that time, the mortgaged person will have paid the value of his house and the interest that his entity will have charged him for the loan of the money. Although we have finished the economic part, the loan will not yet be fully canceled at the legal level, so we will have to do one last procedure.

When the mortgage is formalized, the bank inscribes the deed of the mortgage in the Property Registry, so once the mortgage is finalized, you must cancel the mortgage at this institution. In order to carry out this procedure, the mortgaged party must request a certificate from their bank specifying the cancellation of the debt in order to present it in the Registry.

This procedure must be done if the mortgage is amortized before the term agreed with the bank. If the term is met naturally, one year after the date is met, the mortgage is automatically canceled, “due to expiration.”

If we cancel the mortgage before the signed term, the first thing to do is request a zero debt certificate from the bank. This document is delivered to a notary to make a new public deed of loan cancellation. Unlike the zero debt certificate, which can be free or have a fixed rate, the notarial deed has a cost directly proportional to the loan amount.

The last step of management ends in the Land Registry. The owner of the property must request, with the notarial deed and the form at hand, the definitive cancellation of the mortgage burden on the property.

How to cancel the mortgage if I sell the house

If you want to sell your house, but you still have a mortgage in effect, there are several ways to do it. One of the ways is through a bridge mortgage. This option is valid for those users who are thinking of selling their house to buy another one, it consists in unifying the outstanding debt of the house that you want to sell and the purchase amount of the next home until the first one is sold. In short, it is a loan that allows you to avoid selling out, since it generally offers a term of 5 years.

Another option would be to cancel the mortgage with the amount received after its sale. In this case, the mortgaged person will have to face the commission for total cancellation in case he has it. After the last modification of the Mortgage Law, in fixed mortgages it is 2% if it is canceled in the first half of the life of the loan and 1.5% in the second half; In variable mortgages the commission will be 0.25% if the cancellation occurs in the first three years and 0.15% in the first five years.

Debtor subrogation. This is the third alternative to cancel the mortgage. Through this method, the mortgaged person sells the house with the mortgage alive, so it consists in changing the holder of the mortgage loan, so that the buyer assumes the payment of the mortgage and the conditions of the mortgage loan contract are maintained. It will be the entity that has to assess the profile and risk of the new owner and who decides the viability of the operation.

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