(edit title) Questions about mortgage on house I bought Pantbrev and bank Options

[MissKD]

Hi everyone! I bought an house in Skåne and I will pay it cash, without any mortgage. I talked to my bank and since I have the money in my account from their side it is a very easy operation. The seller, though, has a mortgage on it. I explicitly told the seller that she has to extinguish the mortgage she has on it and she told me she will do it the date when we go to my bank for the final payment - so the day we will move in, May 31st.

Is this a common procedure?

The house also has a pantbrev for 600K. I want the house to be fully mine, so I need to understand: does this pantbrev mean that the bank still owns part of my house?
I am getting very confused, because everyone says that it is very good to have a pantbrev on the house, but I do not want the bank to have any right on my property.

[Yorkshireman]

Quick answer. Yes.

The pantbrev is most likely the mortgage. ie. the house is the security for the loan the seller has on it. security = pantbrev.
The reason people say it is good with regards existing pantbrev, is that when one is set up it normally costs around 2% of the total amount. So, if You take it over, you do not have to pay that additional 2% for creating your own.

however, You are buying out the property in cash, You do not need the pantbrev.

The final exchange of contracts normally takes place at the bank, and they ensure that all debts are cleared etc... that is normal process.

[Gordy]

Hi MissKD

You are very correct in being concerned about this as any debts are attached to the property and not the individual who took out the original loan.

Having recently purchased a building plot I can confirm what Yorkshireman has said. On the day of the sale we all sat around a table in the bank, buyers, seller, estate agent and bank officials and all the documents were presented to us to declare that all debts attached to the property had been extinguished before we signed and paid over our money.

Best of luck with your new home.

[Puffin]

Hi everyone! I bought an house in Skåne and I will pay it cash, without any mortgage. I talked to my bank and since I have the money in my account from their side it is a ... (show full quote)

Hi everyone! I bought an house in Skåne and I will pay it cash, without any mortgage. I talked to my bank and since I have the money in my account from their side it is a very easy operation. The seller, though, has a mortgage on it. I explicitly told the seller that she has to extinguish the mortgage she has on it and she told me she will do it the date when we go to my bank for the final payment - so the day we will move in, May 31st. ... (hide full quote)

Totally normal procedure - you go to the bank and the existing mortgages are cleared with the money you pay for the house and then you sign to assume ownership

[MissKD]

First of all thank you all for your help! I have been trying to call to my contact at Swedbank but they always say that he is not available at the moment and will call me back. He never does. And this makes me feel more and more lost.

So basically when we will sit at the bank the day of the moving in I can ask that the pantbrev is taken away since I am not borrowing any money, right? Or is it smarter to leave it there, even if I do not take any loan, for the future? Does the pantbrev have a meaning if there is no active loan on the property? All the Swedes I talked to told me that "it is so good to have because if you want to borrow money from the bank in the future then you can do it very easily". But I just do not want anything to do with the bank!!! Call me old-fashioned, or maybe it is because I am Italian

[Johno]

"it is so good to have because if you want to borrow money from the bank in the future then you can do it very easily"

Essentially correct. Its a positive thing to keep these in place sitting dormant and paid off. And when you come to sell, these paid-off mortgages can pass to the buyer for his/her possible use. It costs nothing and potentially saves some administration and speeds up getting these loans re-activated on the property. We kept the papers on a small loan on our property from the previous owners for just that reason. The estate agent gave us the above explanation.

[Gordy]

This does appear to be common procedure, I think there were about 6 pantbrev on the plot we bought stretching back over many many years but only one of them had any outstanding debt.

I remember one house we considered buying had something like 24 pantbev! Swedes it seems just love being debtmonkeys.

[MissKD]

Swedes it seems just love being debtmonkeys.

I totally agree with you. At work everyone has super expensive houses paid by giving just the 15% deposit and with average loans of 50 years. Their salary is two times mine but they do not even think about paying off their debts. When I asked the reply was "why should I do it? This way I can live such a good life, go to the restaurants, holidays wherever I want, a very nice car, etc". And they have kids, so in my book they should be happy about owning something that they can leave to their offspring instead of a bunch of debts.

[bobalong]

Miss KD. Do not be worried just because there is a pantbrev on the property.

It works like this:

When you want to borrow money and use your house as security for a loan. a mortgage deed ie a pantbrev must be created and then registered with the authorities. This can be quite costly.

When you buy your house, the sellers loan is paid off but the mortgage deed itself is still in existence. The value of the mortgage deed or deeds depends on how much people have borrowed previously. There might be more than one.

These mortgage deeds belong to you after you have purchased the property. You can either have them cancelled or use them in the future, it is entirely up to you. If you have them cancelled it means that new ones have to be created later should you want to take a loan out on your house or sell later to someone who wants or needs a mortgage. This is something that a buyer will take into account as it will be them who have to pay for new ones if there are none already in existence.

Therefore, it is better to keep them than to have them cancelled. We purchased a small property years ago with a mortgage deed ( pantbrev) of only 10,000sek which was not enough for what we needed to borrow from the bank, so we had to pay for a new one to be created and have it registered which cost us money.

It does not mean that the seller has not paid off his mortgage. Your contract states that the seller must pay off his mortage and you purchase the house debt free. The usual way is to meet at the bank and sign the final deeds etc and get the keys.

When we bought our first house we were in the UK so we signed everything before hand and just posted all the documents. We picked the keys up 2 months later from the estate agents.
The second house we bought, we met at the bank and did everything there. It depends on your situation and where you will be, but you do not have to be there in person. You just have to arrange to collect the keys later if you cannot be there.

[bobalong]

As far as having 24 pantbrev on a property, this is totally meaningless. They are just mortgage deeds and does not mean to say that there is in fact any debt owed. That is something that the seller must tell you and state in the contract that he is going to pay off with the sale funds. That is why they meet at the bank so that the bank can do this while you are sat in the office drinking coffee.

My friend bought a house with 16 worth in total 1.5 million sek, but there was no actual outstanding debt on the property.

For example:

Someone borrows 10,000sek = 1 pantbrev for that amount is registered. They then pay off this debt. But later:

someone wants to borrow 25,000= not enough credit on the pantbrev in existence so they use the 10,000 in existence but must create one for 15,000 or do a new one for the whole of the 25,000sek they want to borrow. = There are now 2 pantbrev in existence totalling 25,000 or 35,000 depending on how much was done for the second one. Both of these could be paid off but:

Then a new loan is required for 50,000sek = not enough with the other 2 to secure the debt so yet another new pantbrev is required. You can use the 2 in existence which total 25,000 or 35,000 but you still need another created for the remaining 15,000 or 25,000 or you might decide to make a new one for the full 50,000 = you now have 3 pantbrev registered depending on how you used them previously etc. They will total 75,000 or 85,000. They will always be worth that amount even if you pay the debt off.

Some of these have been in existence for many many years and might only be worth a few thousand sek each. It is the total amount that a buyer is interested in not how many there are.

ie one for 10,000 then one for either15,000 or 25,000, then another for 25,000 or 50,000. and so on. Every time you borrow more than what the mortage deeds/pantbrev are worth, a new one has to be created.

[DaveN]

Just make sure that if there is a loan on the house, that the sale price will cover the amount outstanding, and if not, that the sellers bank are still happy to sell it and convert the remainder of the loan to a personal debt on the seller.

I bought a house from a neighbour for less than his outstanding loan, so I had to negotiate with his bank and persuade them to take my immediate cash offer, rather than try and sell it through an agent for a higher price, but with all the associated complications, like inspections, loans, guarantees etc.

[MissKD]

Thank you for all your suggestions and clarifications. You helped me so much! Now I have a better understanding of how the pantbrev works and what to expect when I will sign at the bank