You’ve finished paying off your mortgage loan or you’re about to sell your property on the Costa del Sol. Congratulations! But before celebrating, there’s an essential step you can’t overlook: the official cancellation of the mortgage in the Land Registry. This process ensures that your property is free of encumbrances in the Property Registry and can be sold, rented, or inherited without issues.
In Estepona and other towns along the Costa del Sol, where the real estate market is very dynamic, it’s common to come across properties that are still listed as mortgaged even though the loan has already been paid off. That’s why knowing how to properly cancel a mortgage is key to avoiding delays in future buying or selling transactions.
What does it mean to cancel a mortgage?
Canceling a mortgage doesn’t just mean stopping the monthly payments. There are two levels of cancellation you need to be aware of:
- Economic cancellation: this happens when you finish paying the full loan to the bank.
- Registry cancellation: this is the legal step that removes the mortgage lien from the Land Registry.
Economic cancellation alone does not erase the mortgage from the registry. For the property to appear as free of encumbrances (which is essential if you want to sell or rent without complications), you must complete the registry cancellation of the mortgage.
Steps to cancel a mortgage
The steps to cancel a mortgage are simple, but it’s best to follow them in order to avoid mistakes or additional costs.
1. Request the zero debt certificate from the bank
The first step is essential. Once you’ve paid off your loan, you must request a zero debt certificate from your bank. This official document certifies that you have fully settled your mortgage debt.
Is it free? Yes, the bank is legally required to issue this certificate free of charge. They cannot charge you for it. It’s your right as a consumer.
How to request it? You can ask for it at your bank branch, through your personal account manager, or in some cases, via the bank’s online channels. Make sure the document is signed and stamped by the institution.
2. Sign the deed of cancellation before a notary
With the zero debt certificate in hand, the next step is to go to a notary. This is where the public deed of mortgage cancellation will be formalized.
Who needs to be present? You (the property owner) and a representative of the bank (a legal proxy of the institution) must sign this deed before the notary. The bank representative certifies before the notary that the debt has been paid off and that the mortgage can be canceled.
Why is this step important? The public deed of cancellation is the legal document that certifies that the mortgage has been settled and that the bank renounces its mortgage rights over the property. It is a mandatory requirement for the next step: registration at the Land Registry.
3. Submit the deed to the Land Registry
Once the deed is signed before a notary, the final step to cancel a mortgage is to submit it to the Land Registry where your property is registered.
What happens here? At the Registry, the deed of cancellation is recorded, and the mortgage entry is removed from your property’s registration file. Once this process is completed, your property will officially appear as “free of encumbrances.”
Can the mortgage be canceled online at the registry? Some Land Registries are implementing online services to streamline certain procedures, but the most common and reliable way is to do it in person. You can handle it yourself or, more commonly, entrust it to an administrative agency or, if you’re in the process of selling, to your real estate agency in Estepona, which usually takes care of these matters.
Mortgage cancellation costs: who pays?
Who pays the mortgage cancellation costs is a very common question in these types of transactions, and generally, the answer is clear: they are covered by the property owner who wants to release the property.
The main costs associated with canceling a mortgage are:
- Notary: This is the cost of preparing and signing the public deed of cancellation. The amount varies depending on the original loan amount but usually ranges between €90 and €200.
- Land Registry: This is the fee for registering the cancellation. It also depends on the original loan amount but typically falls between €25 and €100.
- Administrative agency (optional): If you choose to hire an agency to handle the entire process for you (requesting the certificate from the bank, going to the notary, and then to the Registry), they will charge their own fees. These can vary significantly, but many people opt for this service for convenience and to avoid mistakes.
It’s important to remember, as previously mentioned, that the bank cannot charge you for issuing the zero debt certificate. If they try to, you have the right to refuse.
Common cases on the Costa del Sol
In dynamic areas like Estepona and the Costa del Sol, where real estate transactions are constant, it’s common to encounter specific situations related to mortgages.
- Selling a property with the mortgage paid off but not removed from the registry: This is more common than it seems. The seller has finished paying off the mortgage but never completed the official registry cancellation. In this case, the buyer will require this procedure to be done before the sale or, during the signing, both parties will agree on its execution. Having an experienced real estate agency in Estepona is essential to coordinate these steps.
- Buying a property with a registered mortgage still in place: If you’re looking to buy a house in Estepona and come across a property that still has a registered mortgage, don’t worry. It’s a common scenario. At the time of the transaction, the seller usually cancels the mortgage using the funds received from the buyer. A good real estate agency in Estepona will ensure this process is carried out correctly and the mortgage is removed either before or simultaneously with the registration of your new property.
- Canceling the mortgage on a second home in Estepona: Many owners of second homes on the Costa del Sol want to release the property once they’ve finished paying off the mortgage. The steps are exactly the same, although distance often makes hiring a gestoría or real estate agency in Estepona the most comfortable and efficient option.
In all of these cases, the support of a real estate agency in Estepona not only makes the process easier but also provides invaluable legal security. A good agency knows the legal and bureaucratic ins and outs, ensuring the property buying process in Estepona is smooth and free of surprises.
Frequently asked questions about mortgage cancellation
We know this topic raises many questions, so we’ve compiled and answered the most common ones about how to cancel a mortgage.
How is a mortgage canceled in Spain?
The process can be summarized in three key steps: first, request the zero debt certificate from the bank; second, sign the cancellation deed before a notary; and third, submit that deed to the Land Registry to remove the lien.
How much does it cost to cancel a mortgage?
The costs vary, but you can expect to pay between €90–€200 for the notary and between €25–€100 for the Land Registry. If you hire an administrative agency, you’ll add another €150–€300. Remember that the zero debt certificate is free.
Can a mortgage be canceled online?
Currently, you cannot complete the entire mortgage cancellation process online. While some Land Registries allow certain documents to be submitted electronically, the notary signing and the physical submission of the deed are usually mandatory. The most common approach is to do it in person or through an intermediary such as an administrative agency or real estate agency.
What happens if I don’t cancel the mortgage in the registry?
If you don’t complete the registry cancellation of the mortgage, your property will still appear with a lien in the Land Registry. This doesn’t prevent you from living in it, but it will significantly complicate any future transaction such as selling it, taking out a new mortgage, or using it as collateral, since buyers or institutions will see the property as having an outstanding charge.
Who pays the mortgage cancellation costs?
Generally, the costs of canceling a mortgage are borne by the property owner who wants to release the property. In the case of a sale, it can be agreed that the seller covers these costs to deliver the property free of encumbrances.
What documents do I need to cancel a mortgage?
Primarily, you will need the zero debt certificate issued by your bank. Additionally, your ID and, at the appropriate time, the cancellation deed signed before a notary, which is the document you will take to the Land Registry.
Conclusions
The registry cancellation of a mortgage is an essential procedure to release a property from encumbrances. It’s not enough to pay the last installment—you must follow the proper steps to cancel the mortgage and ensure the deed is registered at the Land Registry.
In high-demand real estate areas like Estepona and the Costa del Sol, where it’s common to buy an apartment in Estepona or invest in second homes, completing this process helps avoid issues in future transactions.
If you’re looking for security and efficiency, working with a real estate agency in Estepona like Cabanillas Real Estate will allow you to handle the cancellation process smoothly and with full confidence.
Want to buy or sell a property without complications? Contact Cabanillas Real Estate for expert advice on mortgage cancellation and property transactions on the Costa del Sol.
Si tienes consultas puedes contactar en sales@cabanillasrealestate.com
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