Sooner or later, after several years of complying with mortgage payments, it is time to finish paying it off. This debt ends, either because all the monthly payments have been paid, or because enough capital has been saved to liquidate the loan in advance. The owner of a property must take a series of steps to formally cancel the mortgage. In this post, we detail the steps you have to take in this procedure.
The first thing is to pay the creditor the outstanding amount and the commission for cancellation if it has been fixed. You can check how much that commission amounts to in the mortgage contract or in the deeds. Once everything has been paid, the bank must be asked to issue the 'zero debt certificate'. Many banks charge more than one hundred euros to deliver this document, although in theory it must be free, and ask for a provision of funds in case of carrying out the entire process. The agencies, for their part, usually charge between 200 and 400 euros.
The owner must be aware that materializing this procedure may entail the payment of a cancellation fee. This expense is foreseen in the deeds of the mortgage, which will have to go to verify its existence and know the percentage applied. In no case, the bank may demand a commission that is not contemplated in said deeds. Always what is signed in the mortgage loan contract prevails.
Even if there is no cancellation fee, the mortgage is not free. You have to take into account notary fees and registration. Also, we must add the fees of the external agent who processes it, whether the bank through its agency or that which we choose. The experts recommend that the client ask the bank for the provision of funds that must be made to cancel the mortgage and do the same with an agency, comparing both budgets.
Public deed Cancellation
With the zero debt certificate, the entity requests an appointment at the notary to sign the public deed of cancellation of the loan. The owner must provide this professional with all the information related to the home, the amount of the mortgage and the mortgage liability. Although the presence of the client is not necessary, you can go to any notary, it does not need to be the same where the mortgage was subscribed. Since May 11, 2012, and through Royal Decree-law 18/2012, the fees of notaries have risen and are at least 90 euros. Then, the notary will deliver to the interested party or to the agency this document proving that the mortgage has been cancelled.
Then you have to go through the tax office, going to a delegation of the corresponding autonomous community to request the form of the Tax on Documented Legal Acts (IAJD). Cancellation is subject to this tax but is exempt from payment.
Free of charge
With the copy of the tax and the papers of the bank and the notary in your hand, the last step is to go to the Land Registry to make the cancellation effective. Within a period of more than 15 days, the Registry advises proceeding to withdraw the documents and liquidate the minutes. Registration fees amount to at least 24 euros, but it depends on the value of the mortgage.
With the cancellation deeds signed, the last step arrives, which is not other than to record in the registry where the property is registered that this debt has been eliminated in a reliable manner. In this way, the house will be free of charges. This process is carried out by the registry within a maximum period of two to three days, after which the annotation that the mortgage has been written off will be recorded. From the Registry explain that the latest regulations in force establish the gratuity of the registry operation called merger by absorption (after bank restructuring).
Credits: abc.es, cincodias.elpais.com