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Business Insurance

Mortgage waiver or release

Is it possible to request the lifting of a mortgage? The answer is yes!

Moving, selling your home, ending your mortgage repayment, or even buyout by another banking institution are all reasons to request the lifting of a mortgage.

Therefore, it is essential to understand how the release of such a guarantee works fully.

Mortgage waiver: what is it?

By applying for a mortgage, banks protect themselves against the risk of borrower default. If he can no longer pay his monthly loan payments, the lender can resell the property to repay the outstanding debts and all of the debt. Thus, the mortgage is often requested to buy all types of real estate: primary, secondary, or rental residence.

A release is a legal act that puts an end to a particular situation, for example, a guarantee. When registering a mortgage, the collateral is seized for a specific term. As a general rule, this is the term of the loan, to which two years can be added. This extension makes it possible to cover the lender in the event of successive extensions of maturity. Therefore, lifting a mortgage consists of removing it before the term initially planned.

Why take out a mortgage?

A mortgage automatically expires on the date set when the loan deed is registered. In any case, it lasts as long as the mortgage. The mortgage is extinguished when the borrowers have finished repaying all the installments.

It remains registered for an additional year in the file of the land registration service (formerly called the Mortgage Conservation until 2013) instead of two years before the security reform.

Although his property is mortgaged, the borrower retains the possibility of requesting the release of the mortgage guarantee before the expected maturity date. Certain conditions apply. It is possible to lift a mortgage before its term in two cases:

  • when the house or apartment is resold, and the associated loan is prepaid in full;
  • When the loan is repaid in full before its term for any other reason (following a repurchase of credit, a donation, an exceptional cash inflow, an inheritance, etc.).

It no longer appears in the land registration by requesting the lifting of the mortgage.

How do I know if a mortgage is lifted?

A release is a legal act. The creditor (i.e., the bank) certifies that his debtor (the borrower) has fully repaid his mortgage. Like the initial deed, the lifting of a mortgage is formalized through a notarial act. It is then registered at the mortgage office.

There is such a service in each department. The registration must be made where the apartment or house in question is geographically located. To find out if a mortgage is still valid, it is necessary to contact a notary or directly to the land registration service.

What are the mortgage clearance fees?

Having a mortgage lifted before the scheduled date requires a visit to the notary and, therefore, generates release costs. To not have any unpleasant surprises, it is necessary to make an estimate.

Calculation of mortgage lifting costs

If you have repaid your loan early, you must pay the mortgage release fee for whatever reason. They are composed:

  • notary fees and VAT (20%);
  • registration fees;
  • administrative costs;
  • the real estate security contribution (which is equivalent to the old name: “salary of the registrar of mortgages”).

To calculate the total amount of these costs, an estimate of the order of 0.7% to 0.8% of the initial amount of the credit is close to reality.

For example, Mr. X took out a loan of €200,000 to buy his principal residence with a mortgage guarantee. He sells his property a few years later. He must therefore pay: 0.8% x €200,000 = €1,600 to lift the mortgage.

  • Are you selling your property?

In this case, the release costs will be directly deducted from the sale price by the notary. You won’t need to take out any of your cash.

  • Are you repaying your loan for any other reason?

It would help if you planned to use part of your savings and your income to pay the fees with the notary.

Note: the mortgage automatically expires one year after the total repayment of the credit. It is interesting to wait for this period if possible. Indeed, you will not need to pay the release fee.

Mortgage waiver and loan redemption: how does it work?

To benefit from better conditions for your loan, extend its duration, adjust the maturities, or even collect several debts together, you may consider having your mortgage redeemed or consolidated by another banking institution. In this case, it is sometimes necessary to have the initial mortgage lifted. Two points are to be distinguished:

  • The new bank also takes out a mortgage guarantee. With this in mind, the release of the previous mortgage is almost systematically requested;
  • The lending institution takes another guarantee, for example, the deposit of an external organization (for instance, CAMCA, Crédit Logement, etc.). This solution is ideal: lifting the previous mortgage is unnecessary. You, therefore, do not have to pay any fees for this.

Remember to negotiate with your bank adviser: it is sometimes possible to include the mortgage discharge costs in the new loan. This allows you not to dip into your savings.

Who can decide to lift the mortgage?

The release of the mortgage results from a joint agreement between the borrower and the lender. The creditor can oppose the lifting of the guarantee. In this case, it is still possible to seek a court decision.

Judicial mortgage waiver

If you have repaid all of your credit or the mortgage reaches the agreed expiry date, it must be lifted. If the bank objects, it is possible to turn to the court. The latter can issue a court decision to request the cancellation of the mortgage registration.

Amicable mortgage waiver

It is always preferable to move towards an amicable solution if this is possible. The borrower and the lender have an authentic notarial deed drawn up by mutual agreement. The act, drafted by a competent public officer, includes the formalities required by law. It has the same force as a court decision. This solution is the simplest and fastest.

Therefore, borrowers who have mortgaged their house or apartment have several solutions at their disposal to request a release. Depending on the situation they find themselves in, charges may apply and should be taken into account. The release of a mortgage makes it possible to find a property completely free of any guarantee.

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