The cost of a mortgage in Spain

Traditionally, applicants had to pay the majority of the costs in the constitution of a mortgage, but this has changed since June 2019 with the approval of the new Mortgage Law, which regulates that most of the costs of the constitution of the mortgage are now paid by the credit institutions (lender).

The expenses generated by the granting of a mortgage loan in Spain and which are paid by the applicants are:

Appraisal

The bank will ask an appraiser to carry out a report on the value of the property in order to study the viability of the loan. The appraisal is paid by the applicant and the cost can start at around 300 euros for low value properties, with the cost rising proportionally as the value of the property rises.

Arrangement, study or opening fee

Credit institutions charge a percentage for granting the mortgage. It is a one-off payment that is made before the signing of the deed of incorporation of the loan. It can usually be negotiable and varies between 0.5% and 2% of the amount of the mortgage, depending on the credit institution.

Home and life insurance

It is compulsory to take out a home insurance policy for the property that is going to be mortgaged, at least against fire. The policy beneficiary must be the bank, so as to guarantee that, in the event of a catastrophe and total loss of the home, the bank will receive the full amount that had been given. Occasionally, the bank may “suggest” that a life insurance policy be taken out and linked to the loan, so that in the event of the owners’ death, the debt will be settled.

The expenses generated by the granting of a mortgage loan in Spain and that are paid by the bank are as follows:

Notary and Registrar’s fees

Mortgage loans are constituted by means of a public deed that is signed before a notary. That deed must also be registered at the corresponding Property Register.

Stamp Duty

This is a tax that is applied to acts that are formally laid down in public documents, which must be registered and which entail a financial sum, such as mortgages. It is calculated according to the maximum mortgage liability (the sum of the capital, ordinary interest, late-payment interest, administrative expenses and eventual Court proceeding costs).

Administrative agency

The bank will entrust the processing of the mortgage deed to an administrative agency. This procedure basically involves collecting the document from the notary’s office, settling the tax, submitting the document at the Property Register and collecting it again once it has been entered.

At Vicente & Otaolaurruchi we can work out the estimated expenditure as soon as we have specific data about the property you wish to acquire and the type of financing you require.