Paying the last installment of the mortgage is one of the most anticipated moments for many families. But once that last monthly payment is paid, we can ask ourselves, and now what? The mortgage does not end with the payment of the last installment, it is the last step: take charge of the cancellation costs. The banks do not usually give many explanations about these costs, the most normal thing is that they ask us for funds and they tell us that “they take care of everything”. In this article, we will explain in detail everything that has to be paid if you want to cancel the mortgage.
What expenses must be paid when canceling the mortgage?
Taking as reference a variable mortgage of 200,000 euros, the expenses would be the following:
|Cancellation fee (0.50%)||From 0 to 1,000 euros|
|Property registration||24 euros|
|TOTAL TO PAY||From 234 to 1,234 euros|
- Commission for cancellation. The cost of this commission will depend on the outstanding capital to be amortized. For variable mortgages, this commission is between 0.25% and 0.50%. Also, if the last payment of a fixed rate mortgage is made before the scheduled date, we will have to pay a risk compensation commission by the interest rate.
- Certificate of zero debt. It is the document that confirms the settlement of our debt with the bank. In principle it is free, but sometimes banks have charged for their processing.
- Notary fees. Since May 11, 2012, and through Royal Decree-law 18/2012, the fees of notaries have gone up and now they have to charge 90 euros at least.
- The property registration. These expenses are usually not higher than 24 euros.
- Manager. The cost for carrying out the process of the manager does not usually lower 120 euros. Rates are not regulated, so they can be much more expensive.
What banks do not say about mortgage cancellation expenses
Below we explain 3 things that we probably did not know about canceling a mortgage:
- We have the right to manage the cancellation costs ourselves and not have to do the bank. That way we could save some expenses.
- The prices will change depending on whether it is a mortgage loan (a mortgage) or a mortgage loan, the so-called open mortgages.
- Before canceling the mortgage, we can ask the bank to break down and specify what they will be and how much they will cost. In this way, we can avoid surprises and we will have control over the expenses before starting the management.
Two ways to not pay the fees for canceling the mortgage
If we want to modify some condition of our mortgage, but we do not want to face all the expenses of canceling the mortgage, we have two options: novation or subrogation.
1. Novation of the mortgage, negotiate with our bank some conditions, will serve us to change:
- The term of amortization of the mortgage
- Increase capital
- Modify the interest
- Add headlines
- Remove abusive clauses
2. If the bank has not wanted to modify any of these conditions, we still have another option: mortgage subrogation. If we change the bank mortgage, we can modify:
- The interest rate and the benchmark
- Add or remove linked products
- Remove commissions
- Remove abusive clauses such as the floor clause