Canceling a mortgage in Spain involves assuming certain costs, both economic and administrative. These expenses include early repayment, registral cancellation, and possible optional services, such as management agencies. Below, we explain in detail the costs and factors you should consider.
1. What does canceling a mortgage involve?
Cancelling a mortgage consists of two fundamental steps:
- Economic cancellation: Settle the outstanding amount of the loan with the bank.
- Registral cancellation: Remove the mortgage charge from the Property registration, even if the loan has been settled.
Both steps are necessary if you want to completely free the property from any charge.
2. Costs associated with canceling a mortgage
2.1. Early repayment fee
- What is it?
It is a penalty charged by the bank if you decide to settle the mortgage before its maturity. - Approximate cost:
- Fixed interest mortgage: Between 0.5% and 2% out the outstanding capital.
- Variable interest mortgage (according to the 2019 Mortgage Credit Law):
- 0.25% if less than 3 years remain.
- 0.15% if less than 5 years remain.
- Practical example:
- Outstanding capital: 50,000 €.
- Commission of 0.5% → 250 €.
2.2. Notary fees
- What is it?
It is the cost to formalize the cancellation deed before a notary. - Approximate cost:
Between 200 € and 500 €, depending on the original amount of the mortgage.
2.3. Registration fees
- What is it?
The cost to register the cancellation in the Land Registry and remove the mortgage charge. - Approximate cost:
Between 100 € and 200 €, according to the official fees.
2.4. Administrative agency fees (optional)
- What is it?
Service to manage the notary and registry procedures on your behalf. It is not mandatory, but it can facilitate the process. - Approximate cost:
Between 100 € and 300 €.
3. Practical example: Total cancellation cost
Initial mortgage: 150.000 €
Outstanding Capital: 50.000 €
| Concept. | Approximate cost |
|---|---|
| Commission for early repayment. | 250 € |
| Notary fees. | 400 € |
| Registry fees. | 150 € |
| Management agency (optional). | 200 € |
| Estimated total. | 1.000 € |
4. When is there no early repayment fee?
The 2019 Mortgage Credit Law establishes that many variable mortgages do not have a commission if:
- It is canceled at the end of the term.
- The remaining years are few (less than 3 or 5, according to the contract).
This especially benefits those who take out long-term mortgages.
5. Tips to Reduce Mortgage Cancellation Costs
- Check your mortgage contract:
Review the clauses on early repayment and possible penalties. - Do the procedures yourself:
If you don’t hire a management agency, you can handle the notary and registry procedures personally to save money. - Negotiate with the bank:
Some banks may waive or reduce the commissions if you take out other products. - Wait until the end of the term:
If there is little time left to finish the mortgage, there may be no early repayment fees.
6. Differences between economic and registral cancellation.
- Economic cancellation:
You pay the outstanding amount to the bank. This process only includes possible early repayment fees. - Registral cancellation:
Even if you have settled the debt, the mortgage charge is not automatically removed from the Land Registry. This requires:- Cancellation deed (notary).
- Cancellation registration (registry).
7. Necessary documents to cancel a mortgage.
- Zero debt certificate:
Document issued by the bank confirming that the loan is fully paid. - Cancellation deed:
Signed before a notary to officialize the removal of the mortgage. - Request for registral cancellation:
Document submitted to the Land Registry.
8. Is it worth canceling a mortgage?
Early cancellation may be beneficial if:
- You want to save on interest: You will reduce the total costs in the long term.
- You plan to sell the property: Removing the mortgage charge makes the sale easier.
- You want to reduce financial commitments: Settling the debt can improve your economic stability.
However, if the fees or costs are high, it might be more profitable to keep the mortgage until its maturity.
Conclusion: Plan the costs for an efficient cancellation.
Canceling a mortgage in Spain can cost between 500 € and 1,500 €, depending on the contract conditions and services used. Planning in advance, understanding the terms of your mortgage, and evaluating whether early cancellation is worthwhile will allow you to make an informed decision and optimize your finances.
If you need advice on canceling your mortgage or wish to explore options to reduce costs, feel free to contact us!
