sell a flat with a mortgage: Buying a house is no longer for life. If before signing a mortgage was a unique moment for many families who saw the dream of buying their first home come true, now the panorama regarding housing is quite different. sell a flat with a mortgage

sell a flat with a mortgage

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Either because the real estate market has been reactivating in recent years after the bubble or because the economy has shown signs of improvement and has caused some labor mobility in Spain and greater optimism on the part of many owners, the need to change housing has come back to life.

sell a flat with a mortgage

There are those who expand the family and need to move house, while others are forced to move to a new city for work or family reasons.

Be that as it may, in many situations it is necessary to sell the home to buy a new one. But what if we still have a mortgage to pay? sell a flat with a mortgage

Cancel the mortgage when selling a house

When the need to sell the house to buy a new one arises, there are different options. However, if that house has a signed mortgage that we have not yet finished paying, the situation can get a little more complicated, even so, you can sell a flat with a mortgage charge and it is a much easier process than many think. Therefore, we are going to explain how to sell a house with a mortgage.

selling a house

One of the most recurring options is to cancel the mortgage loan. In this way, we leave the property free of charges and it can be sold to a new owner. sell a flat with a mortgage

Although there are currently several options to sell our mortgaged home and buy a new one, it is still not allowed to get rid of the house and continue paying the mortgage loan.

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Therefore, it will be very important to cancel the mortgage to sell the property and be able to buy a new one.

However, depending on how the purchase and sale operation is, the cancellation of the mortgage will have to be done in two different ways: sell a flat with a mortgage

Cancel the mortgage when selling the house for a higher price

It is, without a doubt, the best option. If we manage to sell our home for a price higher than the amount that we have left to pay at the bank, the cancellation of the mortgage will be an easier process. In this case, we will have to go to the bank and request the certificate of outstanding debt balance.

Once the purchase and sale contract is signed and said document has been reviewed, we must return to the bank and settle the amount of the mortgage with the money from the purchase and sale operation.

In addition, it must be taken into account that if it is a mortgage loan that has a cancellation fee, these additional costs will have to be faced.

In general, if the cancellation occurs during the first five years of the mortgage term, the penalty may not exceed 0.5% of the outstanding principal. If it is done later, the commission will be a maximum of 0.25%.

Likewise, if we have signed a fixed mortgage, the entity could also charge compensation for interest rate risk, which may be between 0.5% and 5%. Along with all this, we will have to face the payment of personal income tax for what is known as capital gain.

In this article you can find out about the taxes paid for selling a house.
Of course, the only thing that in these cases we will not have to pay is the Registry, since the cancellation will also have to be made effective in the Property Registry. However, this part will have to be borne by the buyer.

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Cancel the mortgage when selling the house for a lower price

In many cases this may be one of the scenarios that we find. And it is that, above all, due to the real estate bubble, there are many apartments that were bought at high prices and that now cannot be sold for that same value or an approximate value.

Therefore, if the mortgage debt is very high, it is possible that it ends up being sold at a lower price than the mortgage.

In this case, we will also have to request the outstanding debt certificate from the bank and pay all the money from the sale to it. The amount that we have left to pay will no longer be a mortgage itself, but will become a new mortgage loan, with different conditions.

At this point, we will also be required to pay the mortgage cancellation fee (if any) and the costs of setting up the new personal loan (if any).

Therefore, if this is the only option within our reach, we will first have to make calculations and assess whether it is worth selling the house or waiting for it to appreciate in the future.

Subrogate the mortgage to the buyer

Although mortgage subrogation is commonly known as the way that mortgagees have to transfer their loan to another bank to improve its conditions, it is also possible to use subrogation to sell our house and buy a new one, that is, you can sell a house without canceling the mortgage.

Through the subrogation of the mortgage loan it is possible to sell the house and transfer mortgage to another person. To do this, both the seller and the buyer must go to the entity in which the loan is signed and request the subrogation of the mortgage.

This will imply a risk study on the buyer to avoid non-payment, similar to the one that is done to any person who applies for a mortgage loan.

In this way, if the entity approves it, the change in the ownership of the mortgage can be carried out and this will become the responsibility of the buyer.

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Of course, in these cases the seller must face the payment of the risk study of the new owner, the processing and subrogation of the mortgage.

The latter may not exceed 0.5% of the outstanding capital if it is made during the first five years of the loan. If the operation is carried out later, the cost may not be greater than 0.25%.

Despite these expenses, this is one of the simplest and most economical ways to get rid of the foreclosed home, since we will not have to bear the costs of canceling the loan.

Apply for a bridging mortgage

If we need to move urgently and this implies the purchase of a new home, it is possible that the most appropriate option is to apply for a bridging mortgage.

This product is recommended for those people who cannot get rid of their house in a short period of time and are in a position to face a higher payment for their mortgage.

And it is that the bridge mortgage allows the owner to unify two mortgages in one.

That is, instead of paying two separate loans, we can unify them into one, making the total calculation of the installments less than what we would face if we paid two separate mortgages.

In this way, once the house is sold, we can cancel the debt and only assume the installments of a new traditional mortgage that we will have to formalize for the new home.

It is an alternative for those who have to move urgently. However, it must be borne in mind that to obtain this mortgage we will have to commit to the bank to sell our property within a certain period.

In addition, the bridge mortgage means practically double the mortgage payment during the time that we maintain the two homes, so it will be necessary to make calculations to assess whether or not it is the best option.


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