To carry out this double work, create the mortgage contract and ask for its registration (its recording) on the real estate file held by the land registry, the notary asks the purchaser for a remuneration, fees in the jargon, the amount of which is fixed by decree, proportional to the amount of the real estate credit. To this remuneration of the notary, VAT at the rate of 20 % is added.
The service of the land publicity to register the mortgage makes the purchaser pay taxes which makes the constitution of a mortgage all the more cumbersome. The notary who registers the mortgage with the Land Registry Office pays these taxes and requests reimbursement from the owner-borrower
The fate of a conventional mortgage
A mortgage is established for the duration of the loan and is automatically canceled, without any particular formality, one year after the payment of the last installment of the credit by the borrower.
Rare are the buyers who decide to keep the property until the complete repayment of the loan. The registration of a mortgage does not prevent you from selling the property when you want, without waiting to finish repaying the loan. You will thus make an early repayment of the real estate loan.
Since the mortgage that you granted when you purchased the property is registered with the land registry, the notary in charge of the sale will know precisely who the bank that lent the funds for the purchase is. He will contact the bank to know precisely the amount still due on the credit, which he will deduct from the proceeds of the sale and pay it directly to the lending bank
The main disadvantage of any mortgage
In the event of sale of the property before the complete refunding of the real estate credit, it is necessary to ask for the radiation of it, to make the release of it in the jargon. When you had constituted the mortgage at the time of your acquisition, you had borne costs and taxes. It’s the same when you get out: obtaining the release of a mortgage, it pays. Only a notary can request the cancellation of a mortgage and, for this work, makes the seller pay a fee set by decree. In addition, there are taxes payable to the Land Registry Office for the cancellation of the mortgage. The fees and taxes for the discharge of a mortgage are, however, lower than those borne for the constitution of a mortgage at the time of purchase.
What happens when you can’t repay the credit?
But what happens when you can no longer repay your credit? The mortgage gives the lending institution a right to the property until the loan is fully repaid. This right of real estate seizure allows the lender whose monthly credit payments are not honored to sell the property that is the subject of a mortgage.