How to sell your property with a mortgage
Do you have a mortgage and want to sell your property? Having a bank debt is not a brake when putting your home for sale. There are formulas so the financial transaction can be done without problems. Please let us explain how to sell your property with a mortgage
Having a mortgage does not mean no selling can be done until the bank debt is settled. Nowadays, there are alternatives so anybody with a bank mortgage can also move to another estate and and put the property for sale. Procedures and mechanisms exist, but it is important to know them in detail to avoid last minute problems that could ruin the financial transaction.
As any property has to be free of charges and taxes before the selling, if there is still mortgage pending the first step is to cancel it. However, as long as the future buyer accepts it, there is another formula known as subrogation. Let’s have a look at all the possible alternatives and its implications,
How to sell your property with a mortgage. Mortgage cancellation
It consists on clearing the mortgage loan signed with the bank. That is, paying the amount still outstanding. How? Either having enough liquidity to face the debt, or selling the property for an amount higher than the one bought at the time.
In that latter case, the seller has to request the mortgage bank the so-called “outstanding debt certificate” with the date of the signing of the sale. Once the transaction is completed, the seller must return to the bank and cancel it administratively, by means of check deposit that the buyer has previously issued. Once the check is logged into the bank, the seller must request the bank the “zero debt certificate”, and bring it to the Notary, where the transaction of sale has been arranged. The same Notary will be responsible for the last necessary procedures, such as, notification of cancellation of mortgage to the Land Registry, etc.
Mortgage subrogation
This formula allows to transfer the mortgage credit of the property for sale to the buyer, as long as the latter requests and accepts it. In this case, it would be a subrogation method between individuals, which implies some implicit requirements. Although, at first glance, it may seem just changing loan holders, it requires a specific procedure.
The first step is to report it to the bank entity with which the mortgage is subscribed, so the bank can accept the new debtor, that is, the property buyer. In order to fulfill this change, the bank entity will perform a risk study similar to the one carried out when applying for a mortgage. Although subrogation has no tax payment associated with mortgage loan, it will be necessary to pay the expenses related with this type of operation: Notary, Registry, Agency expenses, and a subrogation commission that is normally signed when the mortgage is initiated.
In any case, when chossing this option, the buyer saves the bank opening commission and the seller, the cancellation expenses, as the transaction goes from one person to another.
In any of these options, the Real Estate Agent should be present. Although being independent about the alternative taken on this matter, will always advise, inform and guide when selling a property to obtain the greatest economic benefits, thanks to the extensive knowledge about the real estate market.
Remember that at Hermes & Mathew, all our Real Estate Agents offer extensive experience in real estate market, to guarantee quality purchase and sale operations. In addition, we have a wide portfolio of apartments for sale with the best features of the market.