Mortgage costs, real estate appraisal costs, commission for opening a mortgage, stamp and notary fees, as well as taxes on mortgage loans and capital gains – check what costs you have to pay to buy a property in Spain. We indicate which costs are mandatory and which can be passed on to the bank granting the loan.

Costs associated with buying a house or apartment in Spain

Taxes, fees and transaction costs related to the purchase of real estate may vary depending on:

  • region of Spain
  • purchase of real estate from the secondary or primary market
  • sources of financing the purchase (credit, cash, etc.)

The purchase of real estate in Spain is connected with the necessity of incurring additional costs related to the transaction itself and the service of the loan. It is worth knowing, however, that not all costs associated with the mortgage must be borne by the buyer. So if you are at the stage of choosing the best loan offer, check what costs are associated with the purchase transaction itself. And also which of these costs you will have to bear, and which costs you can avoid.

If you do not want to overpay, choose a good real estate agency. Unfair agencies may impose additional costs during the purchasing process. If you want to avoid surprises, choose cooperation with Tripinvest. We will realistically inform you about the amount of costs at the beginning of the cooperation and we will not surprise you with additional costs.

The cost of the property valuation by an appraiser

Property valuation must be made by an appraiser who has been appointed by the bank granting the loan. The appraiser’s appraisal is aimed at checking whether we are applying for the right amount of credit, or maybe a loan application at 60/70% of the property value exceeds the real value of the property.

The final cost value depends on the type and value of the property. The appraiser’s costs are borne by the buyer and are on average between 300 and 600 euros.

Bank loan interest rate

Banks and financial institutions in Spain determine the value of loans based on variable interest rates associated with the annual interest rate EURIBOR and increased by a margin. Banks can set their own margin level, but due to high competition, rates generally remain at a similar level.

Variable mortgage rate

When choosing a loan with a floating interest rate, you will pay interest at the level of the EURIBOR interest rate plus a margin for the lending institution. In recent years, the EURIBOR rate has been negative, which is why banks willingly granted variable rate mortgages plus a margin of 2-3%. For example, at the beginning of 2019, the EURIBOR rate was at – 0.37%. Then, with a variable interest rate of 1.8% – 3%, you can theoretically pay only 1.43%. Loans with a variable interest rate are popular mainly among native Spaniards. Non-Spanish customers, however, most often opt for a loan with a fixed interest rate, which guarantees them full security.

The biggest advantage of choosing a loan with a change in interest rate in Spain is the opportunity to take advantage of cheaper loans thanks to negative EURIBOR rates. The downside is that you do not know the fixed interest rate of the loan, and over time the value of interest may increase, which means that you can pay off a much higher loan installment than that calculated on the day of buying the property.

Fixed rate mortgage

If you would like to use a loan with a fixed interest rate, you can choose loans with a fixed interest rate of 2.5-3.5% on average. The disadvantage of a fixed-rate mortgage is that the current loan installments are slightly higher than those for floating-rate loans. However, the advantage is that you know the exact value of loan installments throughout its repayment period.

Due to the small difference in loan installments with fixed and variable loan rates, loans with a fixed interest rate are definitely the safest form. Choosing a loan with a fixed rate, you are guaranteed the amount of the loan installment, regardless of the Spanish economic situation. And it is loans with a fixed interest rate that are the most popular choice among customers from Poland.

Commission for opening a mortgage (opening commision)

According to the Spanish Mortgage Act, this is a commission that a financial entity may charge in connection with granting a mortgage. The law does not regulate this commission. It is usually regulated by the market. All banks charge a fee for establishing a mortgage, and the value of this fee depends on the amount of the loan. Most often it is a charge of 0.5 – 3% of the loan amount.

Other bank commissions

Basically, the catalog of commissions that a bank can impose on a borrower is a closed catalog, which means that banks cannot independently impose any number of commissions on the borrower. When taking out a loan, you should also pay attention to the following costs:

Early repayment commission – the bank cannot prohibit early repayment. If you decide to repay the loan before the date specified in the loan agreement, the bank has the right to charge you with an additional commission. The amount of commission for early repayment of the loan should be indicated in the loan agreement – properties for sale in Costa Blanca
Commissions arising from clauses that do not comply with the provisions of the mortgage law – banks may not impose commissions or fees for activities that do not comply with the provisions of the mortgage law. If such a provision appears in the loan agreement, then they will be considered as prohibited clauses.

The cost of translating documents

The bank asks you to provide documents in Spanish or English, which means additional costs associated with the translation. The bank does not take on the cost of translations, most often it expects the client to provide the translated documents. If we have documents in a language other than English or Spanish, then we will have to bear the cost of a sworn translator. The price of translations depends on the chosen offer of a sworn translator, as well as whether we care about the express service or whether we can do it within the normal deadline. Document translations can be made in Poland. As a real estate agency, we can also recommend Spanish translators. However, if you are not in a hurry with your purchase, it is worth looking in advance at the offers of sworn translators so as not to overpay.

On average, this cost will be around 1000 – 1500 PLN. If we opt for express translation in Spain, the cost can be up to 700 euros.

“Gestoria” – payment for the adviser

When granting loans, Spanish banks use the institution characteristic of the Spanish real estate market called “Gestoría”. Gestoria is nothing but companies or experts involved in handling activities related to paying taxes and mortgages as well as registering property deeds. It is the bank that chooses the specific gestoria service. The amount of the fee for the work of banking experts depends on the value of the mortgage and the amount of work involved. This cost is imposed by the bank on the mortgage customer and rather this cost cannot be neglected. Most often it fluctuates around 1% of the transaction value.

Tax on civil law transactions Actos Jurídicos Documentados (AJD)

There is an additional fee for taking out a mortgage – AJD tax. The tax on civil law transactions AJD constitutes on average about 0.5% – 1.5% of the value of the property indicated in the notarial deed. If you are buying a property for cash, this fee will not apply to you.

Until recently, this fee was transferred to the Treasury account by the buyer of the property. However, by court decision of 2019, banks are obliged to pay it. Therefore, it is worth ensuring that the bank incurs this cost and does not pass it on to the borrower.

Tax on the transfer of ownership (real estate from the secondary market) or tax on goods and services (real estate from the primary market)

Aftermarket

The amount of taxes on the transfer of ownership related to the purchase of real estate from the secondary market varies from region to region in Spain. Transfer tax on average is around 10% (Alicante region). In principle, the amount of tax may vary from one region of Spain to another.

Primary market

However, if you bought a property from the primary market, then you will be charged the tax on goods and services (Impuesto sobre el Valor Añadido – IVA). The tax on real estate bought from the primary market is 10%.

Tax breaks

At the same time, in Spain you can benefit from a number of tax breaks. For example, you can deduct the cost of repairs, renovations, maintenance and leasing fees from your mortgage interest.

Notary fees and stamp fees

Completion of the transaction requires the preparation of an appropriate notarial deed and issue of a notary’s certificate of compliance with all necessary documents. Notary fees related to the preparation of the land register can be paid by the buyer as well as by the bank granting the loan. These fees are usually carried out by Banking gestures.

Commission for a bank check

The commission is 0.4% of the value of the check, unless we have property insurance bought from the bank, then we pay half of this value.

If you use the services of our Tripinvest agency, we will check whether the commission for the bank check has been issued in the correct amount. Banks sometimes issue several checks and charge separate commissions for them. That is why we check whether the bank checks have been charged only one commission so that you pay as little as possible.

Real estate and life insurance

When you take out a mortgage, you are required to take out real estate and life insurance. Banks often also offer a complementary loan insurance and insurance protection service in the event of difficulties in repayment of the loan, as well as other insurance products. It is worth remembering that the borrower is not obliged to take out all the insurance policies offered, which are usually much more expensive than competing products offered on the market. The amount of insurance depends on many factors, including the value of the property, the age of the insured, the terms of crediting the property, etc.

The bank may not prohibit us from purchasing other external insurance, e.g. a home insurance or continuing existing insurance after the previous owner. However, we know from experience that banks often make things difficult if we are not interested in their insurance offer – additional formalities, requirements for a competitive insurance offer, providing additional documentation, etc. Therefore, we always encourage you to compare the insurance offer of the bank granting the loan and competitive offers and think about whether it would be safer and more convenient to take insurance at the lending bank.

About: Spain


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