Tancrede de Pola (OP Columnist)
ALL mortgages come with extra costs, but they can vary from country to country. Here is a roundup of the extra fees you can expect to pay here in Spain.
Mortgage valuation
A Spanish lender will require that the property be valued by one of their appointed valuation companies. This can cost anything from a few hundred to more than one thousand euros depending on the property’s worth.
Opening Fee
Most Spanish mortgage lenders charge a fixed fee for setting up a mortgage. This is typically 1% of the value of the mortgage, but can range from 0.5% to 2%.
Notary Fee
If a Spanish property has a mortgage secured against it this has to be declared before a Notary and a separate title deed (ESCRITURA) drawn up. Notary fees are based on the number of clauses in the deeds and will have approximately the same number as a purchase deed. The notary will charge for this and therefore a Spanish mortgage increases the Notary costs at the time of signing the public deeds of sale.
Land Registry Fee
A mortgage on a Spanish property must be registered with the land registry, which will increase the land registry fees when buying property. The fee for registering a mortgage is roughly the same as the fee for registering the property.
Spanish Stamp Duty (AJD)
This tax – paid to the government – is worked out as a percentage of a Spanish mortgage. The amount can vary from region to region and will vary according to the amount of the mortgage. In the Costa del Sol it is 1.5% and is calculated as a percentage of the full responsibility, i.e. of the interest payable over the full term as well as the loan amount.
Deed Arrangement Fee
This is paid to the gestoria who arrange for the deeds to be inscribed correctly in the local land registry and to calculate the correct taxes and other costs contained in the escritura. Lenders use their chosen gestoria to ensure both the property and the mortgage have been properly registered. It should cost no more than a FEW hundred euros.
Cancellation fees
It’s important to remember that early cancellation fees are quite the norm and are usually 0.5% of the value of the property. There could also be fees for paying off part of your mortgage early. In any case we can usually negotiate these away.
And, finally, all Spanish lenders are currently making life insurance and buildings insurance a condition for the offer. However, these can often be cancelled after the first year.
If you’ve had a mortgage for a while in Spain, make sure you investigate the floor rate clauses. Many banks have had to pay compensation for overcharging customers. It’s worth looking in to this, and if your bank fob you off on this, as of course most will, get independent advice. Many banks are offering reductions in payments if you move to a new “cheaper” contract, but in fact it’s just a way of them stopping you from retrospectively suing them. Read the small print. Banks, you just can’t trust them lol.