What is a certificate of outstanding debt and how can you request it?

When you decide to sell a property that still has an active mortgage, it is important to know how much you still owe the bank. This information will allow you to calculate how much money you can obtain from the sale and properly prepare all the necessary documentation to formalize the transaction.

One of the documents you will need is the certificate of outstanding mortgage debt, a document that certifies the amount you owe the financial institution on a specific date. But how can you request it? What information does it include? And what happens to the mortgage when you sell your property?

Below, we explain everything you need to know about this document and how it can influence the buying and selling process.

What is a certificate of outstanding debt?

The certificate of outstanding debt is a document issued by the banking institution to certify the amount you still have to pay on a loan. In the case of a mortgaged property, it allows you to know the capital remaining to be amortized at the time of its issuance.

This document is also known as a certificate of outstanding balance or mortgage debt certificate and is especially important when you want to sell a property that is still mortgaged.

In addition to the principal amount remaining to be repaid, the certificate may include other concepts, such as:

• The outstanding capital to be amortized on the mortgage loan.
• Accrued interest that has not yet been paid.
• Possible late payment interest, if you have unpaid installments.
• Commissions or compensation for early cancellation, when applicable.

This way, you can know the amount you will have to pay to settle the loan and leave the property free of mortgage encumbrances.

It is important to note that this document is not the same as a zero-debt certificate. While the former certifies that you still have an amount pending payment, the latter confirms that you have completely settled the mortgage loan.

What is the certificate of outstanding mortgage debt used for?

Its main function is to certify the financial status of your mortgage loan at a specific moment. Although you may need it for various banking procedures, one of the most common cases is the sale of a mortgaged property.

If you want to sell your apartment and are still paying the mortgage, you need to know how much you will have to allocate to settle the debt with the bank. This will allow you to calculate the money you will have left after completing the sale.

For example, imagine you have agreed to sell your property for 250,000 euros and you still have 85,000 euros of outstanding mortgage capital. In this case, you will have to allocate part of the sale price to settle this amount with the banking institution.

The certificate will allow you to know the amount that must be paid to the bank to cancel the loan, taking into account the conditions and applicable amounts on the settlement date.

It may also be necessary in other situations, such as when you want to study a mortgage novation or subrogation, negotiate loan conditions, or calculate the amount you need for an early amortization.

How to request a certificate of outstanding mortgage debt?

Requesting a certificate of outstanding debt is a procedure you must carry out directly with the banking institution with which you have contracted the mortgage.

Currently, most banks offer different channels to request this document, so it is not always necessary to go to an office in person.

You can do it in the following ways:

1. Through online banking or the bank’s app. Some institutions allow you to request bank certificates directly from their digital platform. You just need to access your account, locate the documents or certificates section, and process the request.
2. Through a bank branch. If you prefer to manage it in person, you can make an appointment with your institution and request the certificate from the office staff.
3. By phone or through customer service. You can also contact your bank to ask if they allow processing the request this way and what steps you need to follow.

When making the request, it is advisable to indicate that you need the certificate to sell a mortgaged property. This way, the institution can prepare the document with the necessary information for the cancellation of the loan during the sale.

Before requesting it, also check if the bank establishes any conditions regarding the issuance date or the validity period of the certificate. Since the debt can vary with the payment of new installments and interest, it is important that the information is updated when you arrive at the notary’s office.

How much does it cost to request a certificate of outstanding debt?

The cost of the certificate of outstanding debt may vary depending on the banking institution and the service conditions.

Before processing the request, consult with your bank if the issuance has any cost and if you can obtain it for free through digital banking. It is also important to differentiate this document from the zero-debt certificate, which certifies that you have finished paying the mortgage.

In the latter case, the banking institution must provide you with the zero-debt certificate free of charge when you have requested it to certify that the loan is completely settled.

What happens to a pending mortgage when you sell a property?

One of the questions that generates the most doubts is whether you can sell a property that still has a pending mortgage. The answer is yes. You can sell a mortgaged property without having previously settled the entire loan, provided that the mortgage encumbrance is resolved during the buying and selling process or that a subrogation is agreed upon with the buyer and the financial institution.

In a typical sale, the procedure works as follows:

1. You request the certificate of outstanding debt.

Before formalizing the sale, you ask the bank for the certificate to indicate the amount remaining on the mortgage.

2. Debt payment is prepared.

On the day of signing before a notary, part of the sale price is allocated to settle the mortgage loan. Typically, this amount is delivered directly to the banking institution by bank check or another agreed-upon form of payment.

3. The mortgage is settled with the bank.

Once the outstanding amount is paid, the loan is financially settled. This does not mean, however, that the encumbrance has automatically disappeared from the Property Registry.

4. The registration cancellation is processed.

For the property to be free of encumbrances, the mortgage cancellation deed must be formalized before a notary and registered in the Property Registry. This procedure allows the removal of the mortgage encumbrance that is still registered on the property.

It is important to differentiate between economic cancellation and registration cancellation, as they are two different procedures. Having paid off the entire loan does not mean that the mortgage has disappeared from the registry.

Therefore, before putting your property up for sale, it is advisable to have control over the loan situation and know the procedures you will need to follow to complete the transaction.

If you are thinking of selling your property and still have a pending mortgage, at Espígul we accompany you throughout the buying and selling process. Our team advises you at every stage, helps you prepare the necessary documentation, and resolves any doubts that may arise so that you can sell your property with the peace of mind of having everything under control.