We can define the cancellation of the registered mortgage as the operation that is carried out in order to make the burden that it is registered on the property disappear from the Land Registry, once the debt with the bank disappears, by the different means that exist for this purpose.
However, it is important to point out that there are like two steps to follow when it comes to mortgage cancellation.
Formalities involved in mortgage cancellation
In the first instance, the mortgage must be cancelled, once you wish or are able to do so. That is to say, the debt with the bank from which we obtained the corresponding loan. This cancellation is done by paying the bank the amount due.
Once the debt with the bank has been paid off, either in advance or at the end of the life of the loan, the bank will issue a « zero debt » certificate, which certifies that we are no longer in debt to the bank.
With this cancellation, we stop owing money to the bank and officially no longer have a mortgage. However, in the Property Register there is still the mention that, at the time of acquiring the property, we constituted the mortgage.
Now, is it necessary and compulsory to cancel the mortgage with the Land Registry? The answer is clearly no, it is not compulsory, but it is advisable and convenient.
Therefore, you can choose between requesting the cancellation of the mortgage with the Land Registry or leaving the property with the registration of the mortgage, even if it is economically cancelled.
How should the cancellation of the mortgage be registered in the Land Registry?
In order to be able to register the cancellation of the mortgage in the Land Registry, the notarially signed deed must be presented to the Land Registry, which certifies the cancellation, as well as the settlement of the corresponding taxes. It is important to note that, in order to sign the mortgage cancellation deed, the owner of the property and former debtor does not have to go to the notary’s office, but only and exclusively the bank that granted the loan.
Advantages of registering the cancellation in the Property Register
- Currently, the tax to be paid for the cancellation of the mortgage is zero; that is to say, although the tax has to be paid to the Tax Office, there will not be any amount to pay.
- Having cancelled the mortgage financially and in the registry, it is possible to apply for a new mortgage in the future.
- The value of a property free of encumbrances and debts is higher than a mortgaged property, especially if you intend to sell the property in the future. In addition, the future buyer will demand, when acquiring the property, that the debts are cancelled in the registry.
Therefore, we can say that, although the cancellation of the mortgage in the Land Registry is not compulsory, it is highly advisable in order to leave the mortgage free of any debt or burden.
Have you applied for a mortgage loan and have you finished paying off that debt with the bank? Do you know how you can cancel the mortgage? If you want to make your mortgaged property debt free, now you can do it with Imont Legal & Taxes. We are at your disposal to provide you with all the necessary information and to solve any of your doubts regarding our work in real estate taxation, as well as any of the other branches of law to which we are dedicated.