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Financial Dictionary - Mortgage charges

Mortgage charges

Mortgage charges are financial obligations that a property carries and that are passed on to whoever buys it. Mortgage charges represent a limitation of use and ownership and can pass from one owner to another when a sale and purchase transaction takes place, so before taking the step of buying a house, you must check that the property is free of them; if not, the sale cannot be carried out.

To find out if a property has obligations, you will need to go to the Property Registry and request a nota simple.

What type of mortgage charges are there?

First of all, the mortgage, which is the most common. Before there is a potential buyer, the loan must be paid off, or it can be subrogated (that is, the mortgage will pass from one owner to another).

There is also a legal attachment, which occurs if the seller has had an asset frozen as a form of payment of a debt that they have entered into. In that case, the attachment will have to be cancelled, although the buyer may deduct the debt from the price of the property.

Then there is the lease, which occurs when the property is rented at the time it is sold. In that case, the tenant may stay until their rental agreement ends.

There is also the usufruct and easement, which affects the use of the home (and not its ownership) until the obligation is extinguished.

There may also be other charges not registered with the Registry, such as debts with the community of neighbours. For this reason, before signing you must request a certificate from the chairman or administrator.

Municipal taxes will not appear in the Registry either. We mainly refer to the Property Tax (IBI), which is paid every year. If the seller has not paid the IBI, the debt will pass to the new owner. To check if the flat is up to date with payments, you will need to ask the town hall for proof of payment.

What to do if the property you are going to buy has charges.

You must ask the seller to cancel the mortgage, or you can deduct the outstanding debt from the sale price of the house, or subrogate, always with the consent of the bank. Another possible option would be to take out a mortgage with a second bank if it offers better conditions and provided that the initial bank accepts.


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