Mortgage cancellation costs: how much does it cost to cancel a mortgage?
If you want to cancel your mortgage, whether because you're selling or because you don't want the charge to appear on the nota simple, you'll need to go through some paperwork to remove the mortgage from the land registry.
Most of this paperwork has a cost. In this blog we explain how a mortgage is cancelled and how much it costs.
How much does it cost to cancel a Mortgage?
Most of the costs of cancelling a mortgage vary and depend on many factors. It's important to talk to your bank and get professional advice to know exactly what costs you'll have and avoid surprises.
How much do you pay to cancel a Mortgage?
Cancelling the mortgage at the registry is a necessary step, although not mandatory, if you want your home to be shown as free of charges. The costs of cancelling a mortgage are as follows:
Bank costs: some banks charge their clients for the document certifying they've paid off the full debt, so the mortgage is financially cancelled. By law they must give it to you free of charge.
Unicaja, BBVA, Santander and other banks charge around €100 plus VAT for this document. Although it isn't mandatory, many banks make mortgage cancellation unnecessarily expensive.
Notary costs: the notary's fee for drawing up and signing the mortgage cancellation deed is at least €80. The price is capped by the notaries' association scale and depends mainly on the loan amount.
Registry costs: once you have the mortgage cancellation deed, you'll need to take it to the land registry for the home to remove the charge from the register. The registry charges set fees with a minimum of €24, although they also depend on other factors such as the amount cancelled.
Gestoría: if you hire a gestoría to cancel the mortgage, you'll need to add its fees. The average in Spain is €300, although there's no set minimum or maximum, as it depends on each gestoría.
Do you have to pay any tax?
No. Mortgage cancellation is exempt from Stamp Duty (AJD) in Andalucía.
Who should pay the mortgage cancellation costs?
The cancellation costs fall to the seller, as it's their obligation to hand over the home free of charges and bear all the costs of removing them, in this case the mortgage.
However, the parties can agree at the signing of the deed that the buyer will bear the cancellation costs. In that case it must be properly set out.
How can you save on cancelling a mortgage?
Most of the time it's the buyer's bank that handles removing the mortgage, making it more expensive by charging you for the gestoría.
Although this is the most common practice, it isn't the most advisable. Where the mortgage has already been paid off, it's highly advisable for the client to cancel the mortgage themselves before signing at the notary, so the buyer's bank doesn't charge you.
You can also look for a notary who guarantees the minimum fee for the cancellation deed.
Finally, Valoracasa Estate Agents cancels all its clients' mortgages completely free of charge where necessary, saving the client considerable money and time.
How does the advance payment for mortgage cancellation costs work?
If you hire a gestoría to cancel the mortgage, you'll need to make an advance payment. This is an approximate, rounded-up estimate of all the costs that will have to be paid to cancel the mortgage.
The gestoría will ask you for the advance payment to process the cancellation. Once the mortgage has been removed from the registry, the gestoría will give you the original invoices for the costs paid and refund any money left over.
If you sell a home with a mortgage, it will be the buyer's bank's gestoría that asks you for the advance payment.
You may also be interested in:
Costs of buying a home in Andalucía
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