Cession and expiry of the mortgage
There are two very different situations for the borrower: the first, unexpected, whereby their creditor bank changes and the other, far more satisfying, the final repayment of that eternal mortgage.
On the one hand, all going well, the borrower will receive very few surprises in the repayment of his or her mortgage; the only shocks he or she may face are the interest rates in the case of a variable-rate mortgage. However, there are also cases of mortgage transfer. This is an exceptional and unexpected situation which occurs very rarely; the complete opposite of a redemption, and longed for by anyone tied to a never-ending mortgage. Let’s look at the situations.
Transfer
There are occasions when one moneylender will transfer the debt to another. The only necessary requirement to do this is to communicate the transfer to the borrower so that they pay the new creditor. This process transfers both the debt and the mortgage with which it is guaranteed, as these cannot be transferred separately.
Although it’s not compulsory, the bank may enter the transfer into the Registry, though this would mean the potential buyer of the debt could find out who the payment of the outstanding amount belongs to.
Redemption
This is the moment all those tied down by a mortgage are waiting for. But, to be brought into effect it must be entered into the Registry, since the mortgage itself was set up through registry inscription. Nevertheless, there are two a mortgage can be paid off:
- Redemption of guaranteed right: as the repayment of the debt is guaranteed with the mortgage, once the borrower has finished repaying the loan amount, the bank cannot liquidate the mortgage –that is, take legal action leading to the sale of the property in order to cancel the mortgage debt. However, and as shown above, this must be entered into the Registry.
- Dissociation from the main obligation: this occurs in cases such as the loss of a property by a borrower or creditor renunciation.