Did you know that selling a flat with a mortgage is very common in Spain today?
The reality is that many people need to sell their mortgaged properties for various reasons: job changes, moving to another location, divorce, or the birth of a new child. However, the process can seem overwhelming when we consider that cancellation costs can reach 1,000 euros, not including other costs that can range between 5% and 15% of the sale price.
Furthermore, the options are varied. For example, if you owe the bank €40,000 and sell your flat for €100,000, you could make a profit of €60,000 after settling your mortgage. On the other hand, there is also the possibility of subrogating the mortgage to the buyer, which can result in significant savings on cancellation costs.
In this step-by-step guide, we will explain everything you need to know to successfully sell your mortgaged flat, from the initial preparation to managing all the necessary procedures.
Proper preparation before selling a mortgaged flat is essential to ensure a successful transaction.
To start the selling process, you will need to gather several essential documents:
Energy performance certificate
Certificate of occupancy
Property deed
Building technical inspection certificate (ITE)
Floor plans
Certificate of no debt with the community
Latest IBI receipt
Paid utility bills
To determine the sale price, you must first consider two main scenarios:
If the sale price exceeds the outstanding debt: For example, if you owe €50,000 and sell for €100,000, you will get the difference as profit.
If the price is lower than the debt: In case of selling for €80,000 with a debt of €100,000, the remaining €20,000 will become a personal loan.
Before putting the flat up for sale, it is essential to request a certificate of outstanding debt from the bank. This official document details:
The exact amount pending amortisation
Accrued interest (if any)
Possible early cancellation fees
The certificate can be requested free of charge through the bank's digital banking or app and is usually obtained within 24 to 48 hours. Furthermore, it has a limited validity of three months, so it is advisable to request it when the property transaction is about to take place.
It is important to mention that the bank takes between 24 and 48 hours to digitally send this certificate to the mortgage holder. Therefore, it is advisable to request it sufficiently in advance to avoid delays in the selling process.
There are two main alternatives for selling a flat with a mortgage, each with its own specific advantages and considerations.
Mortgage cancellation during the sale is the most common option. In this process, the buyer issues two cheques on the day of signing: one to the bank for the outstanding mortgage balance and another to the seller for the difference.
However, in addition to the financial cancellation, it is necessary to perform the registration cancellation in the Property Registry. The total cancellation costs can reach 1,000 euros, including:
Management fees (up to 300 euros)
Notary fees
Property Registry costs
To reduce these costs, it is possible to negotiate with the bank to perform the registration cancellation independently or through an independent agency, which can mean savings of up to 600 euros.
Subrogation allows the buyer to assume the existing mortgage. This process requires:
Going to the current bank with the buyer
The bank will evaluate the buyer's profile and solvency
If the bank approves, the subrogation is signed
Among the advantages of subrogation are:
The seller avoids cancellation costs
The buyer saves on the opening fee
It is not necessary to pay the Tax on Documented Legal Acts (IAJD)
However, it is important to consider that the bank is not obligated to accept the subrogation. If the bank rejects the operation, it will be necessary to proceed with the mortgage cancellation to complete the sale.
Furthermore, the seller must inform the buyer about all the mortgage conditions, including the outstanding capital, term, and specific conditions. The bank, for its part, is legally obligated to provide all relevant information to the new holder, including possible fees and expenses, through a subrogation document.
Once the decision to sell your mortgaged flat has been made, it is essential to follow an orderly process to successfully complete the transaction.
The first essential step is to obtain the certificate of outstanding debt from the bank. This official document details:
The outstanding capital for amortisation
Accrued interest (if any)
Early cancellation fees
The bank issues this certificate free of charge within 24 to 48 hours. Furthermore, you can request it through the banking app or digital banking at no cost.
During the signing before a notary, you will need to present:
The certificate of outstanding debt
The Tax on Documented Legal Acts (IAJD) form
Documentation proving the tax settlement
At this time, the buyer will issue two cheques: one to settle the debt with the bank and another for the difference to the seller.
Subsequently, you must carry out the registration cancellation to remove the mortgage lien from the Property Registry. This process includes:
Requesting the zero debt certificate from the bank, which is free and confirms that you have settled the mortgage
Going to a notary of your choice with the certificate. The bank will send a representative to sign the cancellation deed at no additional cost
Presenting the Tax on Documented Legal Acts (IAJD) document at the corresponding Tax Agency delegation. This procedure is mandatory but exempt from payment
Finally, submitting the cancellation deed and the stamped IAJD to the Property Registry. The registrar will remove the mortgage lien in approximately 15 days
Total cancellation costs, including notary, registry, and agency fees, usually amount to around 1,000 euros. However, you can reduce these costs by carrying out some procedures yourself, especially the management at the Property Registry.
The costs associated with selling a mortgaged flat require careful financial planning. Let's analyse the main expenses you will need to consider.
The registration cancellation of a mortgage involves several fundamental costs:
Notary fees: Between 200 and 600 euros, depending on the original mortgage amount
Registry fees: Approximately 200 euros to remove the mortgage lien
Agency fees: Around 300 euros, although this service is optional
The total cancellation cost can vary significantly depending on the chosen method. For example, doing it yourself costs approximately 400 euros, while doing it through a bank agency can exceed 1,000 euros.
The most relevant commissions include:
Early cancellation fee: Ranges between 0.5% and 1% of the outstanding capital
Certificate of outstanding debt: By law, the bank must provide it free of charge
Furthermore, the bank cannot charge for sending a representative to the notary or for certifying that the debt has been settled.
When selling a mortgaged flat, you will have to face several taxes:
IRPF for capital gain: Different brackets apply depending on the profit obtained:
Up to 6,000 euros: 19%
Between 6,000 and 50,000 euros: 21%
Between 50,000 and 200,000 euros: 23%
Between 200,000 and 300,000 euros: 27%
More than 300,000 euros: 28%
Municipal capital gain tax ("Plusvalía municipal"): This tax is calculated based on:
The cadastral value of the land
Years of ownership
Coefficients established by the city council
However, there are important exemptions for IRPF:
Over 65 years old selling their main residence
Reinvestment in a new main residence
Dation in payment due to inability to pay the mortgage
Selling a mortgaged flat may seem like a complex process, although it is perfectly manageable when all the necessary steps are understood. Total costs, including cancellation fees, bank commissions, and taxes, generally range between 5% and 15% of the sale price.
Before starting the process, it is essential to gather all the necessary documentation and request the certificate of outstanding debt. The two main options - cancellation during the sale or subrogation to the buyer - offer different advantages depending on the specific circumstances of each case.
The choice between these alternatives will depend on various factors, such as the bank's willingness to accept the subrogation or the buyer's ability to assume the existing mortgage. Certainly, careful planning and adequate advice will significantly facilitate the entire process.
The success of the operation lies mainly in meticulous preparation and knowledge of all associated costs. After all, selling a mortgaged flat represents an important decision that, if well managed, can be beneficial for both the seller and the buyer.
Is it possible to sell a house that still has a mortgage? Yes, it is possible to sell a mortgaged house. The process involves requesting a balance letter from the bank or financial institution that granted the loan, and then proceeding with the sale. The mortgage can be cancelled during the transaction or, in some cases, transferred to the buyer through subrogation.
What are the main expenses when selling a mortgaged flat? The main expenses include mortgage cancellation (which can cost around 1,000 euros), taxes such as municipal capital gain tax and IRPF for capital gain, and possible bank commissions. In total, these costs can represent between 5% and 15% of the sale price.
What happens to the mortgage during the selling process? The mortgage must be cancelled before or during the notary signing of the sale. This involves not only settling the debt with the bank but also removing the mortgage lien from the Property Registry. Alternatively, in some cases, the mortgage can be subrogated to the buyer if the bank approves.
How is the mortgage cancelled when selling? To cancel the mortgage during the sale, you need to obtain a certificate of outstanding debt from the bank. At the notary signing, the buyer issues two cheques: one to settle the debt with the bank and another to the seller for the difference. Subsequently, the registration cancellation must be managed at the Property Registry.
What documents are needed to sell a mortgaged flat? Essential documents include the energy performance certificate, certificate of occupancy, property deed, building technical inspection certificate (ITE), floor plans, certificate of no debt with the community, the latest IBI receipt, and the certificate of outstanding debt from the bank.
