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Those purchasing a property in Spain for the first time are often unaware of the costs. There are the costs associated with the property itself and then those associated with a mortgage if they are not cash buyers.

On this page we explain the costs of purchasing with a mortgage. We try to be as transparent as possible on this as there is a lot of misinformation about fees and taxes. One truth is that it is more expensive buying a property in Spain compared to many other countries, mainly due to the higher taxes.

It is very common in the property industry here in Spain to hear estimates of what the costs are, for example, clients will tell us they have been told they need to allow 12-13% of the purchase price or maybe 15%. The truth is that the percentage can vary considerably depending on the price of the property, the region where the property is located, the advisers appointed (lawyers, brokers, agents, etc.) and the deal agreed with the sellers. Having said that, 14-15% is currently a good guide for clients to use. In the example below, the total costs are exactly 14% of the declared price.

We have included below an example for a used property being purchased for €300.000, where the purchaser is arranging a mortgage for €180.000. The idea is to give an indication of the typical charges involved. All costs are estimated – we will provide a breakdown tailored to your circumstances. In the meantime, the notes provided below the table should help you work out the costs for a different purchase price and/or mortgage amount.

Please refer to our Mortgage dictionary for further clarification on the terms used.

Costs relating to purchase of a property for €300.000 with a mortgage of €180.000

Cost in €

Property costs:

 

Property tax (see note 1)

30.000

Notary, registry, gestoria fees for property deed (see note 2)

1.200

Lawyer fee (see note 3)

2.500

Sub-total

33.700

   

Mortgage costs:

 

Mortgage tax (AJD) (see note 4)

3.600

Notary, registry, gestoria fees for mortgage deed

1.200

Bank opening fee (see note 5)

1.800

Valuation fee (see note 6)

400

Mortgage Direct fees (see note 7)

1.495

Sub-total

8.495

   

Total

42.195

Notes:

1. Property tax varies from region to region and the tax is different when buying a second-hand property compared to a new-build. For second-hand properties the tax is referred to as ITP whereas for new-builds it is called IVA (see our Mortgage Dictionary). These taxes are usually somewhere between 8% and 10% of the property price. Some regions have fixed percentages no matter what the price is, whereas others have tax bands. We can advise on this when you find a property.

2. These fees can vary depending on the bank used for the mortgage, the notary and registry offices used and whether the bank uses an independent gestoria to administer the completion duties. The notary will have to prepare two deeds, one of the property and one for the mortgage and there is a separate set of fees associated with each deed.

3. Lawyers charge different amounts. Many charge 1% plus IVA and negotiate above a certain property price. Some clients appoint gestorias instead of lawyers as they are usually a lot cheaper, without realising that gestorias are not qualified to practice law and therefore the client is not sufficiently protected in the event of any legal problems. A lawyer recognised by their local College of Lawyers (Colegio de Abogados) will charge more than a gestoria and lawyers have guidelines on what they should charge. This does not mean that they all charge the same though. The most important thing is to appoint a competent lawyer.

4. Mortgage tax is commonly known as AJD tax and varies from region to region. It can range from around 2% to 2,5% of the mortgage amount. The amount is dependent on the mortgage amount, the interest to be charged and the mortgage costs. It is a statutory tax, so the banks have to charge a certain amount.

5. The bank opening/arrangement fee is a fixed percentage that the bank charges at completion. The typical amount is 1%, although some banks charge 1.5% or more depending on the circumstances.

6. The valuation fee is charged by the independent valuation company that the bank appoints. The valuation company is usually selected at random by the bank and the amount charged will depend on the company appointed and the property price. The valuer will invoice for their work after they have prepared their report.

7. We charge an initial fee of €495 if clients wish to proceed with a formal application. Prior to this, our advice is free of charge with no obligation to proceed.Our standard arrangement fee of 0.5% (Minimum €1000) of the mortgage amount is payable upon approval of the mortgage. For larger mortgage amounts, depending on the amount of work involved, this fee may be negotiable. If a mortgage is declined or the amount offered is lower than in our initial quotes, we guarantee to refund the fee if clients choose not to proceed. Please refer to our Terms and Conditions.

Full cost breakdowns will be provided upon request and we work with lawyers and the banks to provide accurate breakdowns before completion.

In the above example, the costs work out to be 14,4% of the purchase price. They can be higher than this, for example, for cheaper properties or if the mortgage is 70% of the purchase price. Some banks have minimum opening fees and lawyers and brokers also have minimum fees. Notary, registry and gestoria fees will not be significantly lower for cheaper properties. What this all means is that for cheaper properties, the costs as a percentage of the property price can be significantly higher than 15%.

Always check whether the selling agent has included their commission in the purchase price. Some agents do this and do not charge the purchaser directly. Others do not, so you need to check this out before assessing the overall costs involved.

All estimated costs provided on this page are to give an idea on what fees and taxes are when purchasing a property in Spain. The key point is that they vary considerably and we recommend that you ask for a breakdown specific to your circumstances.

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