Discharge and cancellation of a mortgage

A home loan is extinguished by the payment of the last instalment, but the mortgage may survive the extinction of the bank’s loan, even if only in a “formal” and not substantial sense, for up to a maximum of 20 years after date of registration of the mortgage in the public register. Currently, however, this happens quite rarely.

In fact, for every type of financing, provided it is granted by a bank or a financial institution or an obligatory pension fund, the simplified procedure provided by the current Consolidated Banking Act may be used by the borrower who has fulfilled his payment obligations to obtain the discharge of the mortgage by the bank in a relatively short time and without any further expense. The bank advises the relevant local property department of the Taxation Office that the debt has been repaid and requests discharge of the mortgage that was linked to the home loan. Except in special cases in which the bank, even if the debt has been repaid, may request that the mortgage remain on the books.

In some specific cases, such as conveyances by builders where purchasers of properties yet to be built require protection (link to page) the right to obtain discharge of the mortgage must exist before completion of the sale and therefore a notarised document is required containing the bank’s consent to the discharge.