Selling an apartment in Fuerteventura involves much more than finding a buyer; it is also necessary to ensure that the property is free of encumbrances, i.e. to cancel the mortgage if you have one.
The first thing you must understand is that when a mortgage loan deed is signed, the bank is responsible for registering the mortgage in the Land Registry. However, once you have finished paying the loan and the debt with the bank is completely paid off, the mortgage is not automatically cancelled at the Registry. On the contrary, it continues to appear as a burden on the property.
For this reason, we are going to explain step by step how to pay off the mortgage of your home to facilitate a smooth sale process.
What is the cancellation of a mortgage?
The cancellation of a mortgage does not only consist of finalizing the payment of the loan installments. There are several aspects to consider:
- Pay the last installment of the mortgage loan and pay off the debt in full.
- Early cancellation of the mortgage by early repayment of the outstanding principal.
- To free the property from encumbrances through the process known as lifting or cancellation of the registration.
Cancellation of the mortgage
Paying off a mortgage is an essential step before selling a property, but it can be a complex and tedious process. To make sure that everything is done correctly and smoothly, it is advisable to consult real estate experts. Let’s see what are the steps to follow.
- Zero debt certificate: the first step is to request a zero debt certificate from the bank, which confirms that all mortgage loan installments have been paid. This document is free of charge and essential to continue with the cancellation process.
- Mortgage cancellation deed: with the zero debt certificate in hand, the next step is to go to a notary’s office to prepare the mortgage cancellation deed. The notary’s office will coordinate with the bank so that an attorney-in-fact of the bank signs the cancellation deed. This document formalizes the release of the mortgage charge.
- Form 600 Tax on Documented Legal Acts: it is necessary to file this form with the Tax Authorities. This procedure can be carried out in person or online using the electronic ID card. Then you will have your deed of cancellation with the stamp of the tax administration.
- Registration of the cancellation: with the deed of cancellation and form 600 stamped, you must go to the Land Registry to formalize the cancellation of the mortgage. This process may take a few weeks, usually about 15 days. Once completed, you will be notified and will be able to pick up the deed of cancellation with the notation of cancellation of the mortgage.
What happens if I don’t pay off my mortgage?
If you do not pay off the mortgage after the last installment has been paid, you could face problems when trying to sell the property . The property will appear in the Registry as mortgaged, which will complicate the buyer’s ability to obtain a new mortgage, since your bank will not approve financing on a property with a registered mortgage. This may discourage potential buyers, who may choose not to visit the property because it is not free of encumbrances.
Another drawback is that, if a lot of time passes, finding all the necessary documentation to cancel the mortgage may be more difficult, especially if there have been changes in the financial institution.
In order to avoid these problems, it is recommended to carry out the mortgage cancellation procedures as soon as possible, thus ensuring that the property is free of encumbrances.
If you want to sell a property and do not know where to start in Destiny Home, we are experts in selling homes in Fuerteventura and we will be happy to help you.
