Twenty or thirty years have passed since you moved into your house, but now that you are finally going to pay the last installment of the mortgage, only now will the house be definitely yours, and not the bank with which you signed the loan. But be careful, because even if you have paid your debt, the mortgage will be recorded in the Property Registry for another twenty years.
The mortgage loan in the Property Registry.
As we are going to refer several times to the Property Registry, it should be clear that it is a public institution that depends on the Ministry of Justice. And that although it is not mandatory to register the property of a property in the Property Registry, it is advisable and it is usually done so that it is thus registered in front of third parties.
When buying a home, a public deed serves as proof that the buyer has acquired ownership of an asset from the seller, but how can a third party have knowledge of this fact? This is where the Land Registry comes into play. In addition to property changes, other important information related to the property is recorded: if there are charges (such as if there is a mortgage ) or if there is an entry for seizure on it.
All properties are registered on a folio, inside a book, and this one in a volume. And to locate them they are assigned a Unique Registry Code (CRU) or a Unique Identifier of the Registry Property (IDUFIR). These identifiers are different from the Cadastral Reference, which is used by the Cadastre. By the way, no one at this point confuses the Property Registry with the Cadastre; the latter is the administrative registry of the Ministry of Finance.
When do you have to cancel the mortgage in the Registry?
If you have recently sold a property that had been mortgaged, you will have an idea of what we mean, although it has probably only transpired to you that in order to sell, you need to raise the mortgage, one of the expenses derived from the sale of your home. You entrusted the procedure to your bank, and this to an agency.
Returning to the title of this article, what to do now that the mortgage is finished? Well, there are two options:
A. If you do not plan to sell the property in a long time, you do not have to do anything. To be more exact, after 20 years, the Registry will cancel the mortgage itself free of charge. You just have to let 20 years go by.
B. If you can sell in a few years, or if you are going to ask for another mortgage on that same house. Then you are interested in canceling the mortgage in the Registry so that it is recorded as free of charges because this will be required by the future seller or the future bank that will lend you money.
How is the mortgage canceled in the Registry?
If you have decided to cancel the mortgage, you have two ways to do it:
- Go to your bank (or the buyer’s bank, if the property is going to be sold). This will entrust the procedure to its trusted manager and will ask you for a provision of funds (usually 1,000 euros). It can take several weeks because it requires certain steps (see them below). Then they will give you the deed of cancellation of the loan and a simple note from the Property Registry that indicates that it is free of charges.
- Doing it on your own, with the consequent savings, although it requires having time to do several steps:
1. You need a zero debt certificate. To do this, you have to go to the bank that granted you the mortgage and request it. It is nothing more than a document that indicates that the mortgage loan is fully paid. Although some entities still charge for this document, according to the Bank of Spain’s Banking Client Portal, it should be free.
2. Request a public deed of cancellation of the mortgage. You have to go to a notary public (it does not have to be the same one with which the mortgage was signed). The notary public will notify the attorney-in-fact of the entity that gave the loan to sign the cancellation deed. When that part is there, you have to go back to the notary’s office to pick it up. Banks cannot charge anything for this procedure, what is paid is for the public deed, which is about 200-300 euros, depending on the value of the loan.
3. After three trips (bank and twice to the notary), the next place to visit is the office of the Tax Agency of the Autonomous Community to fill out form 600. A cancellation deed is an act subject to a tax of Documented Legal Acts, but it is exempt. Therefore, you only have to complete the model and deliver it, but at no cost. It can also be done from home with a digital certificate.
4. Finally, with the cancellation deed and the sealed form 600 (or with the proof of having delivered it), you have to go to the Land Registry in charge of the property’s postal code. The documentation is left so that they can register the cancellation of the loan and they will notify you when it is done.