How to sell an apartment with a mortgage? Follow these steps

One of the most common ways to sell an apartment in Spain is with a mortgage, and it’s easier than you’d think. Most people end up selling their property before they’ve finished paying off their mortgage. It might have been paid off, but the mortgage burden still hasn’t been removed from the Land Registry. You’re in luck because it’s all rather straightforward. Check out our in-depth rundown below.

Can you sell an apartment with a mortgage?

Of course you can, whether you’re selling an apartment or a house. You’d be surprised at how many people are willing to buy an apartment with an outstanding mortgage. What’s more, quite often it’s the buyer who assumes the Land Registry-related costs.

There are two ways to buy an apartment with a mortgage: to pay off the mortgage with the money from the sale itself (the most common way); or to change the ownership of the mortgage into the buyer’s name, however this can be rather tricky.

Who pays mortgage cancellation fees?

Mortgage cancellation fees are payable by the seller, and can be anywhere between 5% and 15% of the selling price. This is why the vast majority of sellers prefer to pay off their mortgage by selling their property.

How is a mortgage cancelled through a sale?

If you’re looking to sell an apartment with an outstanding mortgage, the best thing would be to get in touch with the estate agent or place an advertisement on property portals, if the property is free of encumbrances.

The procedure to follow to sell a property with a mortgage is exactly the same as if it had no mortgage. A date must be set for the deeds to be signed which is when these 4 steps need to be followed:

1. Contact your bank to request an outstanding balance certificate. Notify the notary of the sale and the day on which the deed is to be signed. Moreover, ask the bank to issue a certificate stating how much of the mortgage you have left to pay off.
2. Provide the buyer or his/her estate agent with a copy of the certificate of outstanding debt. This must be brought on the day on which the deed is signed before the notary. The buyer must bring two cheques; one for the bank (with the outstanding amount of the mortgage to be paid) and one with the remaining amount for you. It’s therefore important to provide the certificate of outstanding debt in advance.
3. You must be there to sign the deed. This is where the buyer will hand over the cheque to the bank with the corresponding amount that will pay off the mortgage.
4. Next, cancel the mortgage at the Property Registry. Nevertheless, this is not the last step; you must remove the mortgage burden that is still active in the Land Registry. Do this by asking the bank to issue a zero debt certificate. 

Selling a house with a mortgage to buy another

People are becoming less apprehensive about buying a property with a mortgage. If you’re looking to sell your house with a mortgage to buy another one, there are two ways to go about it:

• Pay off the mortgage with the proceeds of the sale. This has been explained in the previous section with all the steps to be followed. However, you will have to take out another mortgage for the new property.
• Bridge your mortgage This is a specific resource for those looking to buy a new home before selling their current one further down the line. To sum up, the bank grants a new mortgage for the purchase price of the new property and adds the outstanding amount of the old property. This means you can pay off your first property mortgage by consolidating the two mortgages into one. Nevertheless, bear in mind that the bank takes both properties as collateral and usually gives you anywhere between six months and five years to sell the first property.

Can an apartment be sold when a mortgage has been paid off?

Of course, you can sell an apartment after you’ve finished paying off the mortgage. However, before you can do this, there’s one last step to take: cancel the mortgage in the Land Registry.

All mortgages are recorded in the Land Registry. Each mortgage is accompanied by the burden (debt) that exists for the property, and is registered with its corresponding mortgage.

If you’re looking to sell an apartment when you’ve already finished paying off your mortgage, you need to cancel the mortgage in the Land Registry to prevent any misunderstandings with the buyer. This procedure is known as mortgage cancellation. Your bank will need to issue a zero debt certificate.