Charge Mortgages (Afgiftspantebreve)

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A charge mortgage is a legal document registered with the property registry (tinglysning) to transfer or preserve exemptions from registration fees when creating new mortgage deeds.

 

This is typically used during the purchase or sale of a property, where existing liens (the seller’s loan) on a property are replaced by new liens (the buyer’s loan). Charge mortgages ensure that the previously paid registration fee on the old mortgage deed does not need to be paid again if the new lien has the same or a lower value than the old one. The purpose of charge mortgages is to facilitate ownership transfers and refinancing by reducing the financial costs associated with registration.

 

Is a Charge Mortgage a Debt?

A charge mortgage is not a debt. It does not represent a financial obligation in terms of payments to a creditor. Instead, it acts as a legal mechanism to retain an exemption from registration fees. The charge mortgage ensures that fees are only paid on any increase in the secured loan amount. The document must include a statement that it is solely created to transfer registration fees and cannot be converted into a standard mortgage deed.

 

Can the Buyer Take Over a Charge Mortgage?

Yes, charge mortgages can be transferred to a buyer as part of a property ownership transfer if the new owner needs to register a new lien on the property. This requires that the previous charge mortgage has not expired or already been used for a fee exemption. Transferring the charge mortgage allows the buyer to benefit from the fee exemption associated with the property, thereby avoiding double payment of the registration fee.

 

What Does it Cost to Create a Charge Mortgage?

The registration of a charge mortgage is exempt from fees, making it a cost-effective solution for property owners who want to retain or transfer the right to fee exemption during refinancing or ownership transfers. However, it is crucial that the process is handled correctly to avoid losing the exemption. Any mistakes could result in the inability to avoid paying the registration fee.

 

Charge Mortgage in Ownership Transfers

In the case of property ownership transfers, a charge mortgage plays a key role in minimizing the costs of new financing. It allows the new owner to use the registration fee and fee exemptions associated with the existing mortgage deed, significantly reducing the costs of registering new loans. This requires that the registration of the new lien includes terms for canceling the previous lien. Your buyer’s advisor should ensure that the seller’s bank is aware of this condition.

 

Who Owns a Charge Mortgage?

The owner of a charge mortgage is typically the person or legal entity entitled to the fee exemption. This can be the property owner or a lender who has been assigned the rights as part of a financing agreement. The charge mortgage includes a statement confirming that it is registered solely for transferring the registration fee and does not represent a debt.

 

Converting to a Charge Mortgage

A charge mortgage can be created either as a new document or by converting an existing mortgage deed or owner's mortgage (ejerpantebrev). This requires that the principal amount on the new mortgage deed is less than the previously registered principal. This flexibility makes charge mortgages a useful tool for both property owners and lenders during refinancing.

 

Interest on a Charge Mortgage

Charge mortgages are not subject to interest, as they do not represent a debt but rather a legal mechanism to transfer a fee-saving benefit from the seller to the buyer—or during refinancing. If the charge mortgage is used as collateral for a loan, the interest on that loan will be determined by the loan’s terms and not by the charge mortgage itself.