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Costs for arranging a mortgage in Spain
There are a number of dfferent costs that are involved in arranging your Spanish mortgage.The amount of funds available with your Spanish mortgage will always be net of these costs. So, for example. If your mortgage is 100,000 euros, and the costs amount to 3.5% of the mortgage amount, then the net funds available will be 96,500 euros. Therefore in making your application we recommend that you allow for costs to be at least 3.5% of the mortgage amount.
Valuation of the property
Before granting a mortgage all lenders in Spain will require that the property be valued by one of their appointed valuation companies. This can cost anything from a few hundred Euros to over a thousand Euros depending upon the value of the property. The person applying for the Spanish mortgage has to pay this cost. The valuation cost for an average apartment is normally in the region of 350 euros. With some lenders it may be possible to arrange a pre-valuation estimate, at no cost.
Most mortgage lenders in Spain charge a fixed fee for setting up a mortgage. This is typically 1%-2% of the value of the mortgage, but can also be higher.
Broking and arrangement fees.
At amortgageinSpain.com we will normally charge a broking fee in the form of a "success fee" when your mortgage is successfully completed. This fee will be discussed with you as our client.
As John Ruskin once said :-
It is unwise to pay too much, but it is worse to pay too little. When you pay too much, you lose a little money, that is all. When you pay too little you sometimes lose everything, because the thing you bought was incapable of doing the things it was bought to do. The common law of business balance prohibits paying a little and getting a lot, it cannot be done. If you deal with the lowest bidder it is well to add something for the risk you run. And if you do that, you will have enough to pay for something better. There is hardly anything in the world that some man cannot make a little worse and sell for a little cheaper, and the people who consider price only, are this man's lawful prey.
Here at amortgageinspain we feel that our fees are justified by the effort and committment that we will put into your application. You can probably find cheaper brokers that aren't as good, and you will certainly find more expensive brokers. We only charge our fees for successful applications.
Our standard fee for successful applications is 0.75% of the mortgage amount (minimum 595 euros, maximum 995 euros). We reserve the right to amend the fees according to complexity of the operation. This can of course mean that we would look to charge less in some cases.
If a Spanish property is to have a mortgage secured against it, then this has to be declared before a publicly appointed Notary. Notary fees are based on the number of clauses in the deeds and a mortgage deed will have approximately the same number of clauses as a purchase deed. On a new purchase you will pay a Notary fee both for the property purchase and for the mortgage. With a remortgage or equity release you will only pay a Notary fee for the mortgage.
Land Registry Fees
Likewise the existence of a mortgage on a Spanish property (the mortgage is seen as a debt against the property) must be registered with the official Land Registry. This slightly increases the land registry fees when buying property in Spain. The fee for registering a Spanish mortgage is approximately the same as the fee for registering the property.
Mortgage Stamp Duty (AJD)
This is a tax paid to the government and is calculated as a percentage of the Spanish mortgage and a percentage of the total interest liability during the mortgage term. The amount can vary from region to region and vary according to the amount of the mortgage. In estimating your mortgage costs you should allow 1.8% of the mortgage amount to cover this cost. This tax is distinct from the stamp duty that payable in respect of the property purchase.
Deed arrangement (Legal) fee
This is a fee payable to the company (gestoria) who arrange for the deeds to be inscribed correctly in the local land registry. Lenders will normally insist on using their chosen gestoria as they need to be absolutely sure that both the property and the mortgage have been properly registered. This should not be more than a few hundred Euros .