Selling an apartment with a mortgage: the complete guide

 

When selling a property, the ideal is to do it with it free of charges. However, this is not always possible. Many times a real estate is subject to a mortgage loan and its owner cannot cancel it before putting the house up for sale. What happens in these cases? Is it possible to sell an apartment with a mortgage? What is the difference between canceling the payment of this credit and canceling it in the registry? What steps do you need to follow? In this article we tell you everything you need to know about it.

Selling an apartment with a mortgage can mean a longer process and subject to more paperwork than in any other normal sale. However, it is possible to do it and come out well, facing the least amount of costs possible. Everything will depend, in the first instance, on whether it is possible for the owner to finish paying the loan in full before selling his home. Then, it will also be necessary to cancel this mortgage in the Public Property Registry for the property to appear as free of charges.

Below we will tell you what the differences are between selling an apartment with a mortgage pending payment and one with a mortgage paid and pending registration cancellation. We also show you what expenses this procedure involves and what happens when it is not done. Finally, we will see how hiring a real estate agent can mean a profit when selling a property subject to this type of credit. We at nphp are here to help. Read on to find out!

What options are there when selling an apartment with a pending mortgage?

All those owners who want or see the need to sell their home ask themselves: is it possible to sell an apartment with a mortgage? The answer is yes. Operations of this type are more than common. However, it will be necessary to distinguish between two different situations when selling with a mortgage loan in between, since the way to proceed will be different. It's possible:

  • Sell ​​the apartment with the mortgage pending payment: in this case, there will be two options. The remainder of the mortgage loan may be paid with the money from the sale, or it may be subrogated to the buyer. It should be noted that this last option is not usually approved by banks. Even if you choose to pay the mortgage with the money from the sale, it will also be necessary to perform the step that we will describe below. It is about canceling it in the registry.

  • Selling the apartment with the mortgage paid but pending registration cancellation: even if the mortgage loan is already paid before putting the house up for sale, it will not be canceled in the registry. What does this mean? That the property will continue to appear in the Property Registry as subject to a mortgage. Therefore, it will be necessary to carry out the corresponding procedure to completely free it of charges.

Below we will see in detail how to proceed in both cases, bearing in mind that the first option corresponds to be succeeded by the second and how imran khan housing scheme karachi works when it comes to these situations.

How to sell an apartment with an outstanding mortgage

It is not always possible to pay off a mortgage loan in full before selling real estate. Although the ideal is to face this process with the house free of charges, the reality is that it is possible to do it with a mortgage pending payment. There are two possible options in this situation:

  • Finish paying the mortgage with the money from the sale.
  • Transfer the mortgage to the buyer.

Although the first option is the most frequent and the second is not usually approved by banks, we will tell you how to proceed in both cases.

How to sell an apartment and finish paying the mortgage with the money from the sale

When it is not possible to pay the entire mortgage credit before starting the sale process, the most common thing is to do it later. For this, the money obtained from the transaction is used. Although it may happen that this amount exceeds the amount of the remaining installments to pay for the mortgage, it is also possible that this is less. Let's see what happens in both cases:

What happens when the sale price of the apartment is higher than what remains to be paid for the mortgage?

This is the ideal situation, since it allows only a part of the money obtained from the sale to be used to finish paying the mortgage and the costs of canceling it, and this is how the team of nadra ehsaas program works.

How to proceed in these cases? It will be necessary to request a certificate of pending debt from the bank, which must then be presented to a notary public. The buyer, for his part, must request the issuance of two checks. One will be for the seller and the other for the bank, which must include the amount of the outstanding debt and the commission for early cancellation. This last check will be received by a representative of the bank. As of the total refund of the expressed mortgage, the sale and cancellation of the credit can be processed.

What happens when the sale price of the apartment is lower than what remains to be paid for the mortgage?

That the money obtained from the sale of the home does not cover the outstanding debt for the mortgage is also a possible scenario. In this case, it will be necessary to obtain an authorization from the bank to execute the transaction. This is because the property works, precisely, as a guarantee of the mortgage loan until it is fully paid.

For this reason, when it is already expected that the sale price will not cover the amount of the debt, it will be necessary to speak with the bank before making the transaction. In this way, the entity will decide whether or not to grant its consent for the seller to cancel part of the pending mortgage with money obtained from the sale and through another personal loan that it may grant.

It is important to clarify that the bank will not always offer this possibility to the owner. Most likely, it will do so when the money obtained from the sale is very little. In general, these personal loans of which we speak do not exceed the amount of 50,000 euros. The bank will analyze whether the seller's financial situation will allow him to pay the corresponding fees.

How to sell an apartment by transferring the mortgage to the buyer

There is a second option when selling an apartment with a mortgage pending payment, although it is not as common as the first. It is about transferring the mortgage credit to the buyer, an operation known by the name of subrogation to the debtor. 

However, as we mentioned previously, it is an opportunity that is unlikely to be accessed, since banks prefer to cancel one mortgage and open another.

How to sell an apartment with a paid mortgage but pending registration cancellation or cancel the mortgage after paying it with the money from the sale

Despite the fact that a mortgage is fully paid, to proceed with the sale of the home it is always advisable to cancel this credit in the Public Property Registry, so that the property appears as free of charges. On the other hand, as we anticipate, it will also be necessary to carry out this procedure when it is chosen to finish paying the mortgage with the money obtained from the sale. Let's see how to proceed in both cases and to which entities can be used:

How to proceed when the mortgage is paid but pending registration cancellation

There are three ways to cancel a mortgage in the Property Registry. Their differences lie, mainly, in the amount of expense that each one implies:

  • Through the bank: this is the most expensive option, since a bank may ask the seller for a provision of funds of between 1,000 and 1,500 euros. This is due to the high management costs involved in this process.
  • Through an agency: unlike the previous option, resorting to an independent agency means lower costs for management expenses and the procedure in general.

  • On your own: of the three options this is, without a doubt, the one that involves the least expenses. When the seller chooses to carry out the procedure on their own, they can save on management costs. However, there is a con and that is that you must submit to the bureaucracy that this type of procedure implies and you will need to have time available to assist the different public bodies that intervene in this process.

How to proceed when the mortgage has been paid with the money from the sale and it is necessary to cancel it in the registry

Now, what happens when, as we described above, you choose to finish paying the mortgage with the money obtained from the sale? In this case, the seller's bank will no longer be in charge of managing the registration cancellation of the credit, but rather the buyer's. This is because he will be the most interested party in making sure housing-related burdens are removed. In this situation, it is important to take into account that:

  • There are certain banks that are very strict in this regard and will only allow the procedure to be carried out through their agency. The problem is that, as we already mentioned, the cost that this can entail is very high. However, it is important to clarify that there is full right to decide to do it on your own account or with an independent agency, only that it will be necessary to negotiate with the entity.
  • Other banks are more flexible, therefore, if requested in advance, there will be greater facilities to negotiate and thus be able to carry out the procedure on their own account or through an independent agency.

Who should be responsible for the mortgage registration cancellation fees?

Practically it is always the seller who must bear the costs involved in the cancellation of a mortgage in the Public Property Registry. Therefore, whenever there is a mortgage loan involved, it is important to take these amounts into account, since it will allow you to better organize the expenses involved in a sale.

Despite this, it should be remembered that, in case of having sold with a paid mortgage but pending registration cancellation, the procedure must be done through the seller's bank. It is different when the mortgage was paid with the money from the sale. In this case, the cancellation must be processed with the buyer's bank, without the need to hire their agency.

Does the mortgage prescribe when it is not canceled in the registry?

If the seller prefers not to register a mortgage loan once the last installment is paid, there is the possibility of waiting for what is known as cancellation of the mortgage due to expiration or prescription.

For this to happen, a period of twenty years must elapse from the end of the term of the mortgage, which appears in the deed. From that moment on, it will be possible to submit an application to the Public Property Registry to eliminate the burden on the home. The corresponding registration costs must also be paid, but it will not be necessary to go to the notary's office or the Treasury.

However, it is important to mention that, until this happens, the home will remain formally linked to an outstanding debt. In other words, if in all those years the owner wants to sell it or apply for a new mortgage loan, yes or yes, he will have to cancel it.

How to sell an apartment with a mortgage through a real estate agency

Although the mortgage registration cancellation procedure is generally borne by the seller, a real estate agency, due to its experience in the market and its knowledge on the subject, can better advice and guide you to carry out all the procedures successfully. It can also guide you regarding all the expenses involved in this procedure.

 

Powered by Blogger.