Paying off a mortgage: costs to consider

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You are in luck because you have already managed to amortize all your mortgage loan after many years. Or, after much searching and touring banks and branches, you have agreed new conditions in your credit with another entity. Even, after years of paying, you are going to sell the property that you have not yet paid off completely. The reasons can be many, but you should know that cancelling a mortgage will entail expenses that, if you don't know and control, can generate significant extra costs.

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Canceling Mortgage Cats

When paying off your mortgage the most common expenses are...

As we mentioned in the introduction to this article, there are many reasons why you may want to cancel the mortgage you have taken out. However, if you want to cancel your mortgage, at least two fixed costs will come your way and you will have to face them: 

  • Notary costs: the process of cancelling a mortgage entails the drawing up of a public deed, which is done through a notary that you will have to pay.
  • Registration costs: when you pay off your mortgage, the costs of registering the title deed at the Land Registry will also be your responsibility.

At the same time, when cancelling a mortgage, another cost that you will assume is that of the agency. However, in this case you can use the manager assigned to you by the bank or, on the contrary, you can hire the services of mortgage advisors.

Early redemption fee: paying off your mortgage early

In addition to these costs, which are fixed for everyone, you will have to deal with other very common variables. For example, if you want to amortize the outstanding capital, the bank can charge you for it, if it is stipulated in the contract. In other words, it will claim expenses for cancelling a mortgage that was signed with a longer term. This is known as an early repayment fee and it is a very common clause in most mortgages currently in force.

How much do you pay to pay off a mortgage?

What you pay when you cancel your mortgage will depend on the fixed and variable costs of the process. In this sense, when you cancel your mortgage, the fixed costs will be the following costs: 

  • Notary fees have a minimum cost of 90 (regulated by law), although it will depend on the amount of each loan. In these expenses a fee is applied on the capital granted at the beginning of the credit, reduced by 70%.
  • The registration fees cost as little as 24€, as they are also regulated, and are calculated according to a percentage or tariff that is applied on the original capital of the cancelled mortgage, reduced by 60%.

In turn, in variable costs, you must take into account the costs of the manager, which will depend on the rates of each one. Do not forget to check clauses or penalties such as the claim for expenses in a cancelled mortgage that your bank may demand. For that, the best thing to do is to use a mortgage simulator such as the one from Trion Finance & Consultingto check how much you have left to amortize and if it is profitable for you to pay the commission for early repayment of your credit.

What do you do to pay off your mortgage loan?

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Canceling Mortgage Fees | Steps to Follow

The steps to pay off a mortgage, regardless of whether you do it on your own or, more easily, with an agency, are as follows: 

  1. Ask your bank for a certificate of zero debt.a proof that we have paid off the mortgage. The banks, although sometimes they continue to do so, by law, they cannot charge or claim it in the mortgage cancellation costs.
  2. Deliver the certificate of zero debt to a notary's officewithout the need for it to be the same one with which the mortgage loan was signed.
  3. Ask the notary's office to draw up and prepare the title deed of cancellation of the mortgage to be delivered to the Land Registry.
  4. Pick up and pay for the deed, after it has been signed by our bank's attorney-in-fact.
  5. Fill in the corresponding data on form 600 of the IAJD (Tax on Documented Legal Acts).sign it and stamp it. Although when cancelling a mortgage this expense is compulsory, it is exempt from payment in most of the autonomous communities.
  6. Deliver the documentation to the Land Registry Office.In other words, present the stamped tax form 600 and the deed of cancellation of the mortgage.

In about fifteen days, with prior notice, you will be able to pick up the documents and pay the fee. The charge on your property will be lifted and your mortgage will be officially cancelled.

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