buy and selling houses

Selling an apartment with a mortgage: options and steps to follow

As experts in the real estate sector, many people ask us for advice on the different ways to buy or sell a house. And we, as professionals of Sky Marketing, bet on the best options in each case, always looking out for the interests of our clients.

In this sense, one of the most common questions we face is whether an apartment can be sold with a mortgage. What is the reason? Many mortgages are granted for 20, 25 and even 30 years, time in which our personal, professional or financial situation can vary greatly.

The question is: are there restrictions on selling a mortgaged home? Can it be sold for a higher amount than your purchase? Should we cancel the mortgage, or will the new owner take over the capital pending payment directly? What procedures should I do?

Why sell a home that is still mortgaged?

Selling an apartment or a house with a mortgage is a more frequent and simpler operation than we think. In fact, mortgages granted over long periods mean that many people have been forced to sell their apartment, still mortgaged, for different reasons:

  • The personal situation of the homeowners’ changes (for example, a couple who have children and need a larger home to live in, or a couple divorces and sells a house to a third party or a party to their ex-partner).
  • The employment situation of the owners’ changes (for example, a move to another city or a dismissal that changes their financial situation).
  • The apartment is an inheritance on which there is still a mortgage but the heir cannot pay it or does not want to keep said property.

Options to sell an apartment with a mortgage

The options to sell an apartment or a house with a mortgage are, fundamentally, three:

  • Cancel the mortgage.
  • Subrogate the outstanding debt to the buyer.
  • Apply for a bridging mortgage.

Below we will tell you what each of them consists of.

How you can sell an apartment with a mortgage by canceling the current mortgage 

Of all the options to sell an apartment with a mortgage, this is the best, especially at the administrative level. Even so, doing so depends on the amount that remains to be paid from the mortgage and the price of the property at the time of sale.

If the sale price of an apartment exceeds the outstanding debt with the bank, there will be no problems and the process is relatively simple. You just have to go to your bank and request the Certificate of Pending Debt. This document is essential to know if a house can be sold with a mortgage, and it must be presented at the notary on the day of signing.

Then the steps are as follows:

  • Once the notary, the seller, the buyer and a representative of the bank have met, the buyer makes the payment for the mortgaged property by bank check.
  • The seller allocates the corresponding part of said check to the pending debt with the bank to correct the mortgage. To this amount you must add the corresponding commission for the mortgage cancellation, and any other related expense.
  • The buyer goes to the Property Registry to provide the cancellation of the debt on the property he has just acquired.

In this case, that is, if the apartment is sold above the amount of the mortgage, there will be money left over, which will be the benefit that the seller obtains from the operation.

But, what happens when the amount of the sale is less than what remains to be paid on the mortgage?

Sometimes selling a flat or a house is a necessity, and some individuals are forced to sell for a price lower than the outstanding mortgage. For example, if we have bought a house for € 200,000 and sell it for € 170,000, despite having “discarded” the property and the mortgage, we will acquire a new debt with the bank (the amount that remains to be paid, in this example, € 30,000) that we will have to remedy through a loan.

So, if you are wondering if you can sell a flat with a mortgage for less money than what remains to be paid on the mortgage, you should know that you will lose money and that you will have to assess whether you can assume the operation.

How you can sell an apartment with a mortgage by subrogating the outstanding debt 

This is another common option for selling a mortgaged home. With a subrogation, the management is much faster and more practical, since the outstanding debt with the bank passes directly from the seller to the buyer.

The only objection to subrogate the mortgage pending to the buyer is that the bank must authorize the operation and the change of owner. In other words, the bank will study the profile of the new buyer to assess whether or not it will be able to face the pending mortgage with the previously agreed installments and interests.

The subrogation of the mortgage to sell an apartment with a mortgage is the simplest option, especially for the buyer, who with this formula saves the expenses of hiring a new mortgage and paying the Tax on Documented Legal Acts. For the seller, liquidating the sale of the mortgaged apartment through a subrogation also represents savings, since they will not have to assume the cost of canceling the mortgage.

The steps of this operation are:

  • The seller must go to his bank to request a mortgage subrogation.
  • The bank begins the study of the buyer’s profile (the seller must assume the possible expenses for commission, study or processing).
  • If the bank gives the go-ahead, both parties will sign the change of mortgage holder.

From then on, it will be the new owner who will cover, in addition to the current mortgage payments, the arrears of the same.

How can you sell an apartment with a mortgage applying for a “bridge mortgage”?

Although it is the least common option to sell an apartment with a mortgage, “bridge mortgages” are a good alternative if we urgently need to buy a house or reinvest in housing.

Generally, bridge mortgages are bank products designed for customers who want to buy a home and need financing but are still paying a mortgage. So, more than a specific formula to sell a mortgaged house, the bridge mortgage is a loan that allows you to buy time for the sale.

When contracting a bridge mortgage, the bank adapts the payments of the two mortgages and gives a period of between 6 months and 5 years to sell the old house. In any case, it is important to know that these mortgages are not granted to all customers, then assume two involves loans have a concrete economic profile (enough savings, high income, job security, etc.)
The purchase of a home with a mortgage is simpler if we know all the options at our disposal to do it. What is our advice? Let yourself be advised by experienced professionals in the sector such as those you will find in Tajarat properties, your trusted online real estate agency. Contact us!


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