Applying for a mortgage in Spain means an approximate cost of 10% of property expenses, so we have to take into account that we will be charged expenses before and after the purchase.
The main expense before the mortgage is granted is the appraisal. The appraisal is the evaluation of the real value of the property and it must be done by a professional or entity registered with the Bank of Spain. The price ranges from about 250 to 500 euros and the appraisal expires after 6 months. The appraisal will dictate the mortgage and percentage of financing offered. Therefore, it is one of the most important steps and the one that must be done first when applying for a mortgage. Normally, banks lend around 80% of the appraised value on your first home.
After the appraisal, we have the mortgage expenses as follows: opening commission, the Tax of Documented Legal Acts (AJD), the notary, the registry of the property and the agency fee.
The initial commission is charged by the bank for the administrative expenses. It can vary between 0 and 1% in mortgages at variable interest, and up to 3% in fixed interest mortgages.
The Tax on Documented Legal Acts (AJD- Actos Jurídicos Documentados) taxes notarial, mercantile or administrative documents. In our case, it’s a notary document with a payment amount to be inscribed in the Registry. The cost depends on each autonomous community, but it is usually between 0.5% and 1.5% of the total mortgage liability, not the amount of the loan.
The notary is in charge of granting the public deed of the mortgage loan. The notary tariffs are fixed by the Government. For example, for a mortgage of €150,000, the notary fee would be about €810. Price may vary depending on the length of the deed, number of copies or if the home is officially protected.
Property Registration Fees in Spain
Registration of property is another cost due to register the mortgage in the Land Registry. This cost is also set by regulations. For example, the cost of the Land Registry for a mortgage of €150,000 would be €370.
If we open a mortgage only for the purchase of a property the bank is in charge of choosing the agency that manages the property registration. The prices here vary, since they are not fixed by the Government. This agency will handle the paperwork until the deed is registered in the Property Registry.
Finally, it is worth mentioning that some banking entities have already begun to take care of some mortgage expenses. BBVA, for example, takes care of notary expenses and the registration of mortgage property. Caixabank handles the registration and management expenses as do many other banks. However, there are still banks, such as Popular, Liberbank and ING that do not assume any mortgage expenses.