If you are wondering if you can buy an apartment with a mortgage, the answer is yes. In this article we at nphp.com.pkare going to tell you why this is possible. And, also, what should you take into account if you make the decision to buy this type of home.
Apartment with mortgage: Yes, or no?
It turns out that you are looking for an apartment to live in. After analyzing, comparing and searching, you have found the home of your dreams. But a detail emerges … it is mortgaged. Your dreams collapse because you think that you will not be able to obtain it this way. But we want you to not lose your illusion and tell you that you can be the owner of that house.
Mini guide to buying a flat with a mortgage
However. You already know that you can have that apartment mortgaged and you go with everything for it. But wait! Before doing anything we recommend you read this little guide that we have prepared for you. Take note and start on the right foot.
1. Request the data of the property in question
It may seem obvious to you, but this step is really essential. Before starting any procedure to buy a mortgaged apartment, it is essential that you ask the seller for a copy of the deed. This way you make sure that, indeed, he is the owner of the house. To do this, you must take a good look at all the data of the property you want to buy and that relate to the seller as its current owner.
As soon as you have the deed, you must request a notification from the Property Registry to verify that the property is in the name of the seller.
In this request, it also requests that they specify if there is information related to existing liens on the property, debts that you do not have proof of or other charges.
If in this notification it appears that there are charges in relation to the property that you want to acquire, then you have two options:
- Require the seller to take over the debt
- Subrogate the mortgage on the property, which is an option to change ownership
Finally, you must ask for the last receipt of the Real Estate Tax (better known as IBI) to verify that it is correctly paid. Also, the proof that you are up to date with the payments of the neighborhood community and the spills associated with the farm.
2. Expenses that you must face if you buy a mortgaged apartment
Once you are sure that the apartment you want to buy is free of charges, the next thing is to start with the procedures to acquire it. You have to know that all the expenses of the sale operation are borne by the buyer. All, except capital gains tax, which must be paid by the seller.
When buying a mortgaged apartment, you must pay a tax that always takes place when it comes to second-hand homes: the ITP (Property Transfer Tax). The amount to which this tax amounts is between 6% and 7%, depending on the autonomous community in which we carry out the transaction. In the same way it is with other aspects related to the buyer’s situation such as, for example, their age, income, etc.)
3. See a notary to carry out the sale
The next thing you must do to be able to buy a mortgaged apartment is to go to the notary together with the deed of the house so that the two parties meet and finish closing the agreements related to the operation.
The notary will be in charge of establishing a date for the signing of the transaction. And, as soon as we do it, we will become the owners of it and we will have to face the payment of the house.
4. Renegotiate the mortgage conditions with the bank
When you proceed to buy a home with a mortgage burden, there is the possibility that the new buyer can re-negotiate with the bank the conditions of said loan. In order to make these changes, you must opt for a mortgage subrogation. And, also, for a novation that will allow you to change the agreed conditions.
Both procedures entail the extra payment of an amount of money that you have to take into account and that varies a lot depending on each particular case. In any case, if you are not at all interested in the conditions imposed by the bank, it is highly recommended that you value the option of carrying out these procedures so that you can opt for more interesting conditions for you.
What should you know if you decide to buy an apartment with a mortgage?
The option of buying a mortgaged apartment is very attractive for people who have enough money to carry out this operation. This is because the price of these properties is usually much cheaper than those that we currently find in the conventional market.
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But, in order to buy houses with outstanding mortgages, you have to know that there are different options that you should consider. And all these options are available in Capital Smart City. From subrogating the seller’s mortgage to applying for a new mortgage with the same entity that puts the apartment up for sale. Or, also, it can be with another bank chosen by yourself.
What is a mortgage subrogation?
If you decide to subrogate the loan from the previous owner, you would become the owner of the existing mortgage, thus replacing the seller of the property in the position of owner.
This procedure is known by the name of “subrogation of debtor” and would be something similar to “substitute”. That is, change ownership to take charge of the outstanding amount of the mortgage. This option allows you to save important expenses when buying an apartment and, for this reason, it was one of the most requested during the real estate bubble.
Currently, this option is no longer the most requested by apartment buyers because a 20% entry is usually requested from the new owner to be able to subrogate the mortgage. But a few years ago they used to grant mortgages for 100% of the value of the property. The reason is that this type of procedure does not suit banks today, since the Euribor is at very low levels.
Subrogated mortgage: is it possible to negotiate it?
It may be that if you buy a mortgaged apartment and request a subrogation you want to renegotiate the conditions of the mortgage with the bank. You have to know that in the event that you want to change some contractual aspects, you will have to make a novation of the contract. This is an essential procedure to be able to make a modification and that entails extra costs, since your signature must be carried out in front of a notary.
Many experts recommend that, before discarding this option, you value the mortgage that the former owner had to assess whether what is stipulated in it interests you or not. It is better to pay a little more at the beginning but have better mortgage conditions in the rest of the process.
Can we change banks with a surrogacy?
This is a very common question among users who want to buy an apartment with a mortgage. Just as you can renegotiate the conditions with the current bank, you can also choose another entity that is more interesting to you.
Most likely, the bank will offer a series of conditions and modifications to try to retain the client in its entity. In any case, the final decision will depend solely on the owner, who can take the mortgage loan to another branch or bank. The team of Blue World City makes sure that all of your bank statements are in order.
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