Once property buyers have paid off the condominium, they usually have the mortgage canceled immediately. But it may make sense to wait before taking this step.
Anyone who finances a property on credit receives a mortgage. Deleting them doesn't always make sense.
Frankfurt. On average, property buyers spend a good 360,000 euros on buying a property - money that they usually have to borrow in part from the bank. Together with the loan agreement, you usually also receive an entry in the land register: the mortgage.
It serves as security for the bank for the loan. Once the loan has been repaid in full at some point, many owners want to get rid of this mortgage as quickly as possible. But in certain situations it can save money and effort to leave the entry standing.
What is a mortgage?
A mortgage is not the same as the outstanding balance of the loan. It therefore does not automatically decrease when the loan is repaid. Even if the owner no longer owes the bank a euro, a mortgage for 200,000 euros can still be recorded in the land register without the bank being able to demand this money.
After the loan has been repaid in full, you are no longer entitled to the original loan claim. However, the mortgage can remain as a mortgage in the land register. It serves as security there.
When is it worth leaving the mortgage standing?
Anyone who needs money for the house or apartment again in the foreseeable future can benefit from the fact that the mortgage is still registered. This can be the case, for example, with a major renovation, conversion, energy modernization or the purchase of a photovoltaic system. Because a “registered mortgage can serve as appropriate security for a new lender,” explains real estate financier Dr. Small.
A visit to the notary is usually unavoidable for deletion.
This means that notary and land registry costs for a new order can be avoided. An old mortgage can also be interesting if you buy a property later. For example, if you want to purchase a second apartment or a house and need a loan for it, you may be able to use an existing mortgage as security. This can simplify financing and save costs.
However, there is an important point to note: the mortgage alone does not guarantee that a bank will actually grant a loan later. Creditworthiness, income, loan value and the specific conditions of the financing are still crucial.
When should owners have the mortgage deleted?
Owners should definitely have the mortgage deleted if the property is to be sold, recommends the North Rhine-Westphalia Consumer Center. Because buyers usually want to take over a property that is free of encumbrances.
Existing land charges are therefore usually deleted or replaced in the course of the sale. The notary coordinates the necessary steps between the seller, buyer and financing bank.
Deletion can also make sense if there is a planned transfer within the family. This is particularly true if parents transfer the property to their children, for example subject to usufruct or right of residence.
This is not just about order in the land register. If the children use the old mortgage as security for a new loan, the bank can fall back on this security if the children have payment difficulties. If a foreclosure occurs, the parents may lose their place of residence.
How much does deletion cost?
Owners first need deletion approval from their bank. The credit institution must issue this free of charge after the loan has been repaid. The deletion is then processed via the notary and the land registry office.
The exact amount of the fees depends, among other things, on the amount of the mortgage. With a mortgage of 200,000 euros, the notary and land registry office can incur a total of roughly 800 euros.
If you leave the mortgage standing and can use it again later as security, you may save these costs - and possibly also the effort of a new mortgage.
Therefore: Do not delete it just because the loan has been repaid. First check whether the mortgage could still have a practical use.
