Cancelling a Mortage in Spain

Paying off your mortgage in Spain is an important milestone, but many homeowners don’t realise that it doesn’t automatically mean your property is free of encumbrances. To fully lift the mortgage charge  from the Land Registry (Registro de la Propiedad), you must take specific legal steps.

This distinction is especially critical if you’re planning to sell your property. While paying off the debt clears your obligation with the bank, the mortgage charge remains on the property’s title until you formally remove it. Here’s everything you need to know to avoid complications and ensure your property is truly debt-free in the eyes of potential buyers.

Why Cancelling the Mortgage Charge is Important

In Spain, when you take out a mortgage, the lender registers a charge on your property as collateral. Once the debt is paid off, this charge doesn’t disappear automatically. If the charge is not lifted:
1. Selling the Property Becomes Complicated: Buyers or their lawyers will notice the existing charge on the property and require proof that the mortgage has been fully repaid, delaying the sale. More importantly, they may insist on withholding a significant portion of the purchase price until the charge is officially removed from the Land Registry. If the buyer is purchasing with a mortgage, potentially even from the same bank that provided yours, the complications increase. You could end up facing unexpectedly high and unfair mortgage cancellation costs, creating additional stress and financial burden.
2. Future Transactions May Be Blocked: Refinancing or using the property as collateral for another loan can be hindered.
3. Legal and Administrative Hassles: Leaving the charge on the Land Registry can cause misunderstandings or disputes later on.

The Process to Cancel a Mortgage Charge in Spain

Here’s a step-by-step guide to cancel the mortgage charge in Spain:

1. Request the “Certificado de Cancelación” from the Bank
After repaying the mortgage, request a certificado de cancelación de deuda (certificate of cancellation of debt) from your bank. This document proves that the mortgage has been fully repaid.

2. Notarize the Cancellation (Escritura de Cancelación)
Ask the bank to formalize the cancellation through a notary. The bank  representative will attend to sign a public deed of mortgage cancellation (escritura pública de cancelación de hipoteca). Some banks charge an administrative fee for this service.

3. Pay the Associated Fees

Cancelling a mortgage charge in Spain involves certain costs:
– Notary Fees: For drafting the public deed of cancellation (escritura de cancelación). These typically range from €300 to €600, depending on the original mortgage amount.
– Land Registry Fees: For updating the property title to remove the charge. These usually fall between €150 and €600.
– Gestoría (Optional): You can hire a gestor to manage the process, but this is not mandatory. Alternatively, you can handle the submission of the cancellation deed to the Land Registry yourself, as no tax forms are required for this step. There are two options: a) Ask the notary to submit the mortgage cancellation deed for registration at the Land Registry for a small fee (approximately €60). b) Submit the cancellation deed yourself directly to the Land Registry.

If you choose to have the notary handle the submission, which is highly recommended for convenience, make sure to select a notary in advance, as not all notaries offer this service. This is particularly important because when you request the mortgage cancellation from your bank, they will ask you which notary you want to appoint. Having this information prepared beforehand can streamline the process.

Additional Considerations

– Taxes: Cancelling a mortgage charge in Spain doesn’t involve additional taxes since you’re not transferring ownership or creating new debt.
– Act Quickly: Even if you’re not planning to sell immediately, it’s wise to remove the charge as soon as the mortgage is paid off to avoid future delays or complications.
– Double-Check the Title: Once the process is complete, request an updated copy of your property’s *nota simple* from the Land Registry to confirm the charge has been removed.

Why Lifting the Charge is Critical for Selling Your Property

If you’re considering selling your property, having an active mortgage charge—even if the debt is paid—can:
1. Raise concerns for potential buyers.
2. Slow down the sale process, as buyers or their legal representatives will request proof that the mortgage is cleared.
3. Create legal uncertainties that could put the transaction at risk.

By proactively canceling the charge, you ensure your property is free from encumbrances, making the sales process smoother and more attractive to buyers.

Conclusion: In Spain, paying off your mortgage is only half the journey to financial freedom. To ensure your property is fully debt-free in the eyes of the law and potential buyers, you must take the necessary steps to cancel the mortgage charge at the Land Registry.

While the process involves some paperwork and costs, it’s a straightforward procedure that prevents future headaches. If you’re unsure how to navigate the steps or need assistance with notary or registry formalities, our experienced legal team is here to help. You can use the following form to contact us: