The cancellation of mortgages can suppose an expense or a saving depending on how it is faced. We are going to review some things that you should keep in mind if you are thinking of paying off your mortgage in 2022.
Facing the cancellation of a mortgage is usually generated around either a modification of the terms of the loan, for example, a subrogation , or because, directly, we can make an early repayment that will allow cancellation to reduce the impact of interest over time.
Be that as it may, it does not always mean savings if it is not done well: we are going to review some things that you should take into account:
Pay off a mortgage
This is a key question when trying to analyze the possible costs of canceling a mortgage . There are different reasons for canceling a mortgage loan, but the most common are the following:
- With the last installment of the mortgage
- When you want to make an early repayment of the mortgage
- Before the sale of the mortgaged house
- Prior to taking out another mortgage on the same home
Although there may be more reasons, those mentioned are the most frequent in mortgage cancellations.
What expenses does it have to cancel a mortgage loan
As indicated above , the reason for the cancellation may ultimately have to do with the expenses that are assumed when canceling . However, there are a number of fees common to all cancellations. These are expenses related to the cancellation procedures themselves.
Notary fees are one of those expenses common to all cancellations . It must be taken into account that the cancellation requires a public deed and therefore the presence of a notary public.
Another expense common to all mortgages is the cancellation in the Land Registry. The deed obtained from the notarial process must be registered and this implies an expense to be taken into account.
Mortgage cancellation expenses according to the type of cancellation
These are expenses that are not generated in all cancellations, only in those that respond to a specific model.
Early cancellation is an example . This is an expense that is generated in the event of early repayment, therefore, it is only paid in that situation. This is an expense that is not always included in mortgages , or that can be negotiated in terms of amount.
Another non-mandatory expense is the one that can be derived from entrusting the agency with the bureaucratic process of cancellation.
Evolution of negative mortgages
These continue in limbo, with claims pending resolution. In this sense, the Bank of Spain affirms that it does not have the necessary competence with which to pronounce itself in this regard.
One of the keys to this problem lies in whether the contracts establish zero as the limit type or not.
Contracts signed before the Mortgage Law of 2019
To this day, the debate continues on whether it is really the bank that should deal with the payment of mortgages with negative interest. At the time that mortgage rates are below -0.5%, the loans granted in which the differential is below 0.5% are shown in negative interest.
This is an issue that financial institutions have been trying to clarify and settle for a long time since they believe that it is complete nonsense that it is the lender himself who has to remunerate the money that he has granted to his clients.
On the contrary, the consumer associations defend the clients and maintain that the entities do have to take charge of said remuneration. In any case, the Bank of Spain does not have the necessary competence to be able to take charge of this matter.
So that claims by consumers to the relevant banking entities are admitted, although if necessary, they can also take their claim to court. Keep in mind that this can only be done by consumers who had signed a mortgage prior to the Mortgage Law of the year 2019.
On this subject, the Bank of Spain itself explains that there was no regulatory provision in our legal system before said law regulating the possible application of negative interest rates to mortgage transactions with consumers. For this reason, the agency believes that it is a matter of private law that must be resolved based on what the banking contract in question provides.
In other words, the key to resolving an issue like this lies precisely in the clauses of the signed contracts. And it is that there are many contracts in which it is stipulated that the limit rate is at 0, but there are many others in which this information does not appear. Precisely the latter are the ones with the greatest possibility of obtaining refunds, according to the approach of the possible revision of the legislation.
The Organization of Consumers and Users itself has launched a campaign called: A deal is a deal, through which it is expected that the banking entities will negatively mortgage them, in addition to paying each of their clients the discount that corresponds to them depending on of their contracts and circumstances.
The Organization defends that a variable interest loan is attractive for the consumer if he can benefit from interest decreases, just as the bank does with increases.