Mortgage
A mortgage is a security interest registered over a property in favour of a creditor — almost always a bank — and in an enforcement sale it is cancelled with the sale rather than passing to the buyer.
What it is, why it matters when bidding, and a worked example.
A home loan is secured by a mortgage over the property itself: if the borrower stops paying, the bank can enforce it and be paid from the sale proceeds ahead of ordinary creditors. The mortgage is entered in the land registry with a date, and that date determines its position in the ranking of creditors.
For an auction buyer, a registered mortgage is not a charge to assume. The judicial sale transfers the property free of it and the entry is cancelled on the basis of the transfer title. The mortgage amount also does not set a floor on the price: it is common for a property to sell for less than the secured debt, and the bank simply does not recover in full.
What the mortgage does signal is useful for another reason: its date anchors the analysis of every other charge. A lease, an easement or a right of habitation created after the enforced mortgage cannot be asserted against the buyer; created before, it may be. Reading the registry certificate chronologically, starting from the mortgage, is the method.
Example
A two-bedroom flat with a €130,000 mortgage registered in 2018 sells at auction for €78,000. The buyer pays €78,000 (plus IMT, Stamp Duty and fees) and receives the property with no mortgage — the bank takes the proceeds and the shortfall remains the debtor's. A lease signed in 2021, after the mortgage, cannot be asserted against the buyer.
Frequently asked questions
Do I have to pay the previous owner's mortgage?
No. In an enforcement sale the mortgage lapses and is cancelled in the registry. The creditor is paid from the proceeds, in whatever position the ranking of creditors assigns.
Can I buy at auction with a mortgage of my own?
Yes, but the timing is the problem: an enforcement sale requires the balance within a short deadline (typically 15 days), which is incompatible with a loan approval started after the award. Buyers using credit arrange approval before bidding.
Related terms
Go deeper
Enforcement, insolvency and tax sales: who runs them, what values and what deadlines.
Read the full guide