What are the costs of arranging a mortgage?
SAVINGS AND INVESTMENT I December 27, 2021
When applying for a mortgage, it is important to know how much we will be paying in additional costs and taxes because they will push up the total price of our new home.
If you are looking to finance the purchase of your home through a mortgage loan, here are the mortgage-related costs you will need to take into account:
Arranging a mortgage inevitably entails various fees and costs:
The appraisal, or valuation, must be conducted by an approved company supervised by the Bank of Spain. These costs include a fixed component and a component that varies, depending on the type of property and other factors.
All mortgages must be formalised in a public document. Notary fees are set by law. The total bill will depend on the amount of the transaction, the number of pages of the deed and the number of copies issued.
As with the property you are buying, your mortgage must also be filed at the Land Registry. The mortgage filing fees are set by law and will depend on the characteristics of the mortgage.
Stamp duty is a tax levied on legal acts that are documented, including public instruments signed before notary. The final amount will depend on the amount of the mortgage and the autonomous community in which the property is located, and range from 0.5% to 1.5% of the mortgage liability (principal plus interest and expenses). We, as the bank, pay this tax.
The bank will instruct an agency to have the deed filed at the Land Registry and pay the corresponding tax on its behalf.
The bank may charge the customer a fee for awarding the mortgage. This arrangement fee typically ranges from 0.5% to 2% of the amount borrowed, although in some cases the bank may choose to waive this fee.
The reform of the Spanish Mortgage Law of 2019 ushered in a new system on how mortgage costs should be shared between the owner and the bank. These costs are now carved up as follows:
So far we have discussed the costs of arranging a mortgage to purchase a home. However, there are also various costs related to the actual sale and purchase of the property. These costs cannot be avoided and the total amount will depend on the price of the property.
These compulsory expenses when purchasing a property include the following:
In a nutshell, buying a property comes with a number of additional expenses relating to the actual sale and purchase and also the mortgage if we require financing. It is important to be aware of all these costs to avoid unpleasant surprises when the time comes to pay.
If you have already found a property and know how much it costs, be sure to calculate your fixed or variable mortgage repayments with our mortgage simulator.
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