Encumbrances are restrictions that the buyer receives along with the home when purchasing it with a mortgage. A person can use real estate, but not manage it in full. Certain difficulties may arise when selling an apartment, renting it out or, for example, donating it . Once the borrower repays the loan amount, the encumbrance will be removed. Let's find out how this happens and what needs to be done.
Types of encumbrances
There is a forced encumbrance, when your apartment is taken away for debts secured by security. And the burden is voluntary. When a person himself agrees to such conditions, for example, takes out a mortgage. We are interested in the latter.
So, you take out a mortgage on an apartment. As soon as a line appears in the Unified State Register of Real Estate stating that you are the owner, at the same time a note is made that there is an encumbrance on the property.
Expert advice
Before paying off your mortgage and removing the encumbrance, you need to know several important nuances. Let's talk about them.
- When you make your final mortgage payment, check where your mortgage currently stands. If the document is in the same bank branch where you took out the mortgage, it will be issued quickly. But if the mortgage is stored in the bank's central vault, the timing of its issuance may be delayed. Banks often sell mortgages to other financial institutions. Therefore, it is necessary to clarify who the current mortgagee is and find out the date the mortgage was issued.
- If you are paying off your mortgage early, ask your bank when the funds will be debited from your account. On the standard monthly payment date or early write-off is possible, upon request. Some banks close the loan early only on the monthly payment date. For example, the borrower makes payments on the 20th of each month. If the borrower deposited funds to fully repay the mortgage on the 5th, the bank will write it off only after 15 days.
- Contact the head of the bank branch with a request to close the mortgage at a time convenient for you. Of course, not every bank will meet you halfway and issue a mortgage, but it’s worth a try.
- If you have been issued an electronic mortgage, you will not have to do anything further. Once the mortgage is paid off, the mortgage is automatically cancelled.
- For any questions, read the legislation. The main laws in this area are laws No. 102-FZ “On mortgage (pledge of real estate)” and No. 122-FZ “On state registration of rights to real estate and transactions with it.”
Restrictions that come after purchasing an apartment with a mortgage
- Bank consent . You will have to coordinate all transactions or any actions with real estate with a financial institution. And it’s not a fact that the bank will agree.
- Limited renovation. While the apartment is pledged to the bank, all legal redevelopment of your home must also be agreed upon with the lender.
- Other restrictions. Each bank, when concluding a loan agreement, can specify its own conditions. For example, if you want to go on a long trip, you will need to notify your financial institution.
How to deal with a shared mortgage?
What to do after paying off the mortgage if it involves equity participation by other parties? If maternity capital was used to repay the loan, then the allocation of shares to the second spouse and children is mandatory. This is one of the undeniable conditions for using maternity capital for personal purposes.
The minimum share size is not determined by any legislative act. Most often, they are guided by the current standards of living space per person in the constituent entities of the Russian Federation (currently - 12 sq. m. per person).
At the same time, the agreement or deed of gift can stipulate the possibility of redistributing shares in the event of the birth of other children.
Registration of shares for each participant in common property is possible within 6 months from the date of full repayment of the debt and removal of the encumbrance.
Any contract drawn up must be certified by a notary . If the parties cannot reach an agreement amicably, they can go to court.
In addition, the allocation of shared ownership can be carried out in Rosreestr . In this case, each family member receives his own certificate.
Closing a mortgage is accompanied by a number of additional actions that require a lot of time and effort from the client. However, only in this case can you count on the absence of problems in the future.
Contact Rosreestr
On the agreed day, the homeowner and the lender’s representative meet at Rosreestr and sign the application to remove the encumbrance on the property. If the borrower applies independently to the authorities, without the other party to the agreement, then he must present a power of attorney on behalf of the bank. The employee accepts the documents and issues a receipt indicating the date when you can appear for new papers. On the appointed day, the owner needs to pick up a new certificate. To do this, it is enough to present your passport and receipt.
What is the procedure for repaying a mortgage registration record and how to submit an application and documents to Rosreestr, read here, we talked about how the mortgage encumbrance is removed at the MFC, Rosreestr or through the State Services website.
Removing encumbrances from a property
To resolve the issue, you need to contact Rosreestr, but the service in some regions is also provided by multifunctional centers. In addition to the mortgage note received from the bank with records of no claims, the following documents are also required to be submitted (the list may vary depending on the situation):
- passports of the borrower and other owners of the apartment (if it is registered for several people);
- copies of the charter and constituent documents of the bank;
- certificate of mortgage repayment with a statement of the credit account and a statement about the absence of debt;
- a power of attorney issued by the bank to remove the encumbrance (it is not required in the presence of a bank representative);
- title documents for the property (purchase agreement, certificate of ownership, etc.);
- an application drawn up personally by the borrower in the prescribed form;
- receipt of payment of duty.
By law, the encumbrance on a mortgaged apartment must be removed within 10-14 days; in practice, the period does not exceed 3-5 days. You can track the process and see the result through the official website. After the encumbrance is removed, the owner has full rights to make any legal transactions with the property. This is confirmed by the issued extract from the Unified State Register.
Removal of encumbrance: independently or through intermediaries?
The whole procedure can take a lot of time. Collecting documents, waiting for the papers to be ready, visiting the bank and the registration authority - these stages of registration will require strength and patience. Those who do not want to waste time on paperwork can turn to lawyers or realtors who provide such services.
In order to close a loan agreement through intermediaries, you will need to issue a power of attorney from a notary.
Based on this document, the specialist will be able to represent the interests of the property owner in the bank and in the registration authority. He will prepare all the documents and carry out the necessary procedures to remove the encumbrance from the apartment.
Possible difficulties
In order for the procedure to be quick and successful, the apartment owner should learn about some nuances and difficulties:
- You should not immediately contact the bank with an application for a mortgage immediately after making the last payment. Closing a loan agreement can take up to 1 month. It is best to start the procedure after 30 days from the date of loan repayment.
- Before making the last payment, it is recommended to request a certificate from the bank with the balance of the amount in order to know exactly how much to pay.
- When receiving papers from the bank, check their contents. All documents must bear the lender's seal and signature. According to clause 7 of Article 17 of the Federal Law “On Mortgages”, the mortgage note issued by the bank after repayment of the loan must contain o.
- If there is a small balance of mortgage debt after making the last payment, the bank will not release the mortgage on the apartment. Before receiving it, the borrower needs to fully repay the loan, even if it is just a couple of rubles.
- You should not delay the procedure. There are no fines for this, but it is better to resolve all issues as early as possible, otherwise you will have to restore all documents to the bank later.
Closing a mortgage agreement and removing the encumbrance from a home is a simple process, but it requires care from the borrower. First of all, he should make sure that he has no debts and that he has fulfilled his obligations to the bank in full.
Last payment
The debt under the mortgage agreement is repaid in accordance with the payment schedule. The client has the right to strictly follow it in terms of amount and terms (pay according to schedule), and to pay ahead of schedule in larger amounts (in this case, the debt is recalculated in favor of the borrower).
The bank must be notified that you plan to close your mortgage early. This can be done directly at a bank branch by writing a corresponding application (a sample application must be requested from the bank), by calling the call center or carrying out an early cancellation operation in the bank’s personal account online. This operation is necessary for the bank to recalculate the payment schedule.
To make the final payment on the loan, you must request information from the lender about the amount of the remaining debt. They can be obtained by contacting the bank in person orally or in the form of a statement, as well as by telephone. The designated amount is paid by the borrower in a way convenient for him.
Immediately after such payment, it is recommended to issue a certificate of absence of debt from the bank. It can be either paid or free. Such a certificate is an official document and is certified by the signatures of authorized persons on the part of the creditor. If necessary, it can be presented at the place of request.
Help contains the following information:
- the date of full repayment of the debt under a specific loan agreement (indicate its number and date of conclusion);
- FULL NAME. borrower;
- date of issue of the certificate;
- position and full name the person who signed the document;
- a phrase about the absence of claims on the part of the bank to the client.
In most banks, after the last mortgage payment has been made, the loan account is closed automatically. However, if such a service is not available, the client must independently write a statement demanding that the account be closed due to the fulfillment of obligations on its part. To do this, you need to have your passport, a mortgage agreement with a payment schedule and payment receipts (just in case).
If the borrower plans to repay the entire mortgage debt ahead of schedule, then the date of such repayment is agreed upon with the bank and the amount is specified. It is highly not recommended to carry out such operations without approval from the lender, since the amount of the final payment may be calculated incorrectly (either up or down).
For your own peace of mind, you can additionally make a request to the Credit History Bureau about the quality of fulfillment of your obligations. The information received contains all the information about the mortgage, the nature of payments and the assumption or absence of delays. Due to the human factor, as well as the features of the program, data may arrive with some delay, which requires clarification.
Documentation
After receiving the papers from the bank, you need to go to Rosreestr at the location of the property and submit an application to remove the encumbrance. Along with the application you will need to provide the following documents :
- letter from the bank about fulfilled obligations;
- mortgage on an apartment with a note about the repayment of the loan;
- document confirming ownership of real estate;
- a copy of the loan agreement;
- owner's passport;
- check for payment of state duty;
- court decision (if the loan was repaid through the court);
- contract of sale.
Return of insurance
In the absence of insured events, the borrower has the right to expect a refund of paid insurance premiums. In practice, this is possible if two conditions are met simultaneously:
- the policy amount was paid at a time for the entire term of the mortgage agreement;
- the loan was repaid ahead of schedule.
In this case, the borrower has the right to demand from the insurance company an insurance amount proportional to the remaining period. For example, if the mortgage was issued for 15 years, but the client paid it off after 10 years, then he can return the insurance amount in 5 years. In most situations, insurance companies do not dispute such claims and return the money. Otherwise, you can obtain payment through the court.
Is it possible to take out a mortgage again?
Yes, and this is allowed to be done even with an existing unclosed mortgage loan. The main criterion is the borrower’s integrity (credit history is checked) and his ability to pay off his obligations (he must have appropriate income and collateral).
However, a re-mortgage is only possible on a general basis. If a person has previously taken out a loan under a preferential program (for example, for state employees or the military), then this opportunity cannot be used again, since after receiving a mortgage the borrower is deprived of the status of someone in need of improved housing conditions.
Confirmation of absence of debt
Obtain a certificate from the bank confirming the closing of mortgage loan payments. At a minimum, it should contain the following information:
- Client's full name;
- information about the zero balance on the credit account;
- number of the mortgage agreement, as well as the dates of its execution and closing;
- phrase about no claims;
- Full name and position of the person who signed the certificate.
Additionally, it is recommended to take a statement with a zero balance on the credit account. If the bank does not close it automatically, you need to write a statement requesting its closure due to the full fulfillment of loan obligations.
Bank notification about repayment
After the entire mortgage has been paid off, you need to go to the bank and apply for a mortgage release. The application must indicate:
- Full name of the applicant;
- address of the property;
- loan agreement number and amount;
- a request to remove the encumbrance in connection with the fulfillment of financial obligations and to issue a mortgage on the apartment.
The application is processed on average for about 14 days, after which the borrower is issued a mortgage and a letter confirming the removal of financial obligations from him. According to paragraph 2 of Art. 17 of the Federal Law “On Mortgage”, the lender is obliged to immediately return the mortgage to the borrower upon fulfillment of his obligations under the agreement.
Mortgage
The procedure for transferring purchased real estate as collateral to the bank is formalized using a mortgage, which is a registered security that regulates the relationship between the lender and the borrower on issues of collateral relations and debt repayment. It specifies the key terms of the mortgage loan, which are considered essential. If discrepancies are identified in the loan agreement and the mortgage, the latter will have priority. Therefore, the preparation of this document should be approached as responsibly as possible.
A mortgage can be issued with or without a mortgage. Such a document is needed, first of all, by the bank, since it is with its help that it can later remortgage or sell it to another credit institution. At the same time, the lender who bought the mortgage cannot change any conditions on this mortgage.
The main purpose of a mortgage is to attract financial resources in the mortgage market. If necessary, the bank, for example, can sell the accumulated reserve of mortgages and receive the necessary funds for turnover.
If a mortgage was issued for the loan, then after closing the debt the bank is obliged to give the borrower the original of this document with a note about the fulfillment of all obligations. In particular, on the reverse side the lender writes: “All obligations under this mortgage have been fulfilled in full. There are no claims against the borrower and pledgors.” The date of the last loan payment is also indicated there, indicating the exact amount.
You can learn more about what a mortgage on an apartment is from this post.
The next step after repaying the debt and receiving a mortgage is to contact the registration authority with a request to remove the encumbrance.
