Find out how to sell your flat with a mortgage.
- The ideal is to sell our apartment free of charge, but this is not always possible.
- The house that we want to sell may have a mortgage paid off, but it is still listed in the Registry, or it may have outstanding debt. Here we explain what to do in each case.
How to sell a house with a mortgage?
Many people who have a mortgaged home, when they consider selling the flat, the first thing they ask themselves is: can a house be sold with a mortgage? The truth is that yes, it is possible, and, in fact, operations like this are carried out every day.
However, although you can sell and buy a home that has a mortgage, we must distinguish between two situations since this will determine how to proceed:
I am selling a house with a mortgage that has not been paid off.
- In this case, we can pay the mortgage with the money from the sale or subrogate (pass) the mortgage to the buyer, although this last option is not approved by the banks.
- Even if we pay the mortgage with the money from the sale, we must go through the process of canceling the mortgage in the Registry, but the buyer’s bank will surely take care of this. However, we can also negotiate to do it ourselves and thus save money. Later on this page, we explain this circumstance in detail.
I am selling a house with a mortgage already paid, but it continues to appear as a charge in the Land Registry.
- In this case, you will have to cancel the mortgage in the Property Registry and then sell the house.
As we can see, there are several possibilities to carry out the buying and selling process, and the most appropriate one depends on the situation and our personal preferences.
How to sell a flat with a mortgage that I am still paying?
If the sale price of the apartment is higher than the debt, we pay the loan with the money from the sale.
If the sale price of the apartment is less than the debt, we will have to negotiate with the bank.
We have not finished paying our mortgage, but we want to sell our flat; how do we do it? The most common situation is that we use the money from the sale to pay off the remaining debt. In this situation, we have two scenarios.
The sale price of the apartment is higher than what we have left to pay on the mortgage.
Here we will use a part of the purchase price to finish paying the debt and to pay the cancellation costs of the mortgage.
We will have to ask our bank for a certificate of outstanding debt. This must be presented to the notary. The buyer, for his part, will request the issuance of at least two checks: one for us and one for the bank with the corresponding amount of outstanding debt and the commission for early cancellation. This last check will be received by a representative of our bank, and, from the total reimbursement of the proven mortgage, the sale and cancellation of the seller’s mortgage can be processed.
The sale price of the apartment is less than what we have left to pay on the mortgage.
It is a decision that does not depend on us because the bank has to give us the authorization since it has our house as collateral for the mortgage loan until we pay it in full.
In this sense, the first thing we have to do is talk to our bank before selling the house to inform them of the situation and see if they agree to cancel the mortgage thanks to the payment of the amount of the sale and a personal loan that we can grant.
In which case would you agree? When the amount remaining after the sale is small enough. In general, personal loans do not exceed 50,000 euros, but the bank will analyze our current financial situation to ensure that we can calmly pay the resulting installments.
It must be taken into account that with the processing of the new loan, we will have to pay the cancellation expenses of the mortgage plus those of the constitution of the new credit if any.
Can the mortgage be transferred between seller and buyer?
Theoretically, yes, that is, there is a solution between the seller and the buyer that involves transferring the mortgage loan from the seller to the buyer.
This operation is called subrogation to the debtor. It really is a very unlikely process to achieve because banks prefer to cancel a mortgage and open another because it is more profitable to open a new mortgage to the buyer with better conditions.
How to cancel the mortgage in the Registry once paid?
With an independent agency
With the bank manager
On our behalf
We must bear in mind that there are two different situations that will influence the process and the way of canceling the mortgage, whether with an independent agency, on our own, or with the bank’s agency.
If the mortgage is paid but still appears in the Registry.
HelpMyCash always advises canceling a paid mortgage before selling. Why? To keep track of the process and the cost of cancellation, which can vary a lot. In other words, we can do this procedure through our bank, ourselves, or with an independent agency, but if we do it in time, we can avoid doing it with the bank that usually charges a lot of money for the cancellation.
A bank can ask us for a provision of funds of about 1,000 to 1,500 euros, given its high management costs. If we do it ourselves, this price will be even lower because we save management costs, but we just have to deal with bureaucracy and have a lot of time available to go to the different necessary bodies (notary, Treasury, and Registry).
If we want to pay the mortgage with the money from the sale
If we still owe the mortgage and we intend to settle it with the money from the sale, the buyer’s bank will be in charge of carrying out the procedures to cancel the mortgage in the Registry. In this case, they will want to make sure that the charges derived from our mortgage are removed from the Registry because they need to have security for the guarantee of the mortgage loan that they have just signed with the buyer. Given this, we must take into account:
- Some banks are super strict, and they want to do it, yes or yes; otherwise, they will not give the mortgage to the buyer. What is the problem? The cost that this may entail. Keep in mind that we are within our rights to tell the bank that we want to do it on our own or with another independent agency, but we will have to negotiate with the entity to accept it.
- Others are more flexible, and if requested well in advance, we will have room for negotiation to be able to take care of the registration cancellation of our mortgage and thus lower costs.
Buyer or seller: who pays the mortgage cancellation costs?
The cancellation of the mortgage is almost always paid by the seller.
Theoretically, it is always us, the sellers, who must pay the cancellation of the mortgage. It is important to know this information since the expenses in the sale of a home are very numerous and thus we can organize ourselves much better.
If we have a mortgage paid before the sale, we will do the cancellation process, either on our own or with a professional agent, and we will pay for it. In other words, it is up to us to choose whether we do it with our bank, ourselves, or with a professional who adjusts the price for us, as we recommend from HelpMyCash.
Do you want to know how much it costs to cancel your mortgage? Compare here what a bank charges you vs. what you would pay.
Now, if we have the mortgage paid but we wait for the negotiation of the sale, we must be careful with the buyer’s bank since, if the time comes to sign, we have not canceled the loan in the Registry, it can force us to do it with your agency, which will mean us canceling it at a higher price.
If, as a seller, you want to save on the price of canceling the mortgage on the apartment you have, inform the buyer from the first contact that you want to take care of the registration cancellation of your mortgage in order to control the cost. In this way, the buyer can notify the bank in advance.
How much does it cost to cancel a mortgage?
It changes a lot depending on the process you use to cancel
If we have not paid the loan, we must add the commission for early cancellation
When selling a mortgaged apartment, we must take into account the total cancellation costs of our mortgage. If we already have the mortgage paid, it will also vary whether or not we go to a bank since, as we have said, our bank could request a provision of funds of between 1,000 euros and 1,500 euros for the process.
This cost could be less if we decide to do it on our own, although in this case, we will have to take care of 100% of the paperwork. It will also be cheaper if we opt for the budget offered by HelpMyCash, with the advantage that a professional will carry out the cancellation process.