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. One option that can help you is mortgage refinance Canada where the new lender will pay off your old debt and you can use the extra money towards the payment of your new home or any other necessity. 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.
