Spanish Mortgage Costs

Lenders in Spain used to pass on all Spanish mortgage costs to the borrower. This was unusual and not allowable in other countries. However legislation has forced lenders offering Mortgages in Spain, to adhere to EU wide practices. Implemented June 2019 the new rules removed a number of borrower costs. Firstly AJD ( mortgage deed tax). Secondly Notary and Land registry costs linked to the deeds of Spanish mortgages.

For clear and concise advice on the costs of arranging a mortgage in Spain Contact us today

What fees apply for a Spanish loan

Banks in Spain, charge a one off fee for the completion of the mortgage in Spain. This fee, is known as a bank arrangement fee, closure fee or completion fee. The fee is only payable on the drawing down of the funds for the mortgage in Spain. The Bank fee is not payable at application stage and neither is it payable if you do not finally buy a property. Or take up the loan on offer.

• Bank fees are charged to cover the cost to the Bank for setting up a new mortgage in Spain
• All new Spanish mortgages require that monies are passed to the balance sheet to cover part of the risk. Spanish Banks utilize part of the fee to ensure the first year of the loan remains profitable
• Bank fees generally range from 1% to 2% and are taken from the gross loan amount at completion
• The Bank fee cannot be added to the loan amount, if maximum loan to value has already been reached
• All bank arrangement fees are included in your TAE, to allow you to consider one offering against another

Valuation fees

Valuation costs fees for a mortgage in Spain, will vary slightly. Depending on how much of the valuation fee the Bank subsidizes. Also if the Bank is in fact looking to make a small profit out of each valuation transaction. Generally a valuation for a property in Spain, instructed via a bank, will be cheaper than if a valuation is appointed privately.

• It is now a requirement of Law that Banks in Spain must accept any valuation, as long as the valuation company is registered with the Bank of Spain
• It is unlikely any cost benefit will be achieved from instructing a valuation directly yourself
• A valuation must be specified for mortgage purposes, to allow it to be used for lending requirements
• Spanish Banks will require a provision of funds is transferred to them for the valuation
• When the valuation certificate is produced, any extra cost will be charged to the clients account, or any surplus monies refunded. The valuation level will be dictated finally by the value given. As a rule of thumb you can expect to pay around 0.10% of the value of the property

Notary and Land registry fees

When buying and borrowing in Spain you will have two deeds. One deed will be the purchase deed. The other is the Spanish mortgage deed. Each deed attracts costs for signing at Notary and Land registry. The Spanish Bank picks up the cost of the mortgage deed.

• Spanish Banks will either manage the registration process, or appoint a third party to do so
• Registration must be accurate to ensure security of loan. For this reason lenders control the process
• Notary and land registry fees for the purchase deed are based on a national scale. Within purchase and loan amount bands
• Land registry costs may depend on the complexity of registration, and cost of any third party involved
• Each Bank takes a provision of funds to cover the registration costs. Funds are retained from the gross loan amount
• Post registration all invoices are sent to the mortgagee. Surplus funds refunded, or further funds deducted from the holders bank account
• It is not possible on day of completion for the funds taken to be 100% precise

Insurance costs another linked products

Some Banks take at completion an amount of funds to cover insurances. Ranging from 1 to 5 years. Interest rates may be linked to contracting the product. This will normally include buildings insurance, which is payable via an annual premium.

• Life cover costs, if applicable, are provided at application
• Buildings insurance costs are provided after valuation. Once the rebuild figure is known
• Offers of lending outline the exact premiums for any linked products
• Compulsory linked products are no longer allowed
• Lenders wishing to sell other products are obliged to also offer terms and conditions without linked products. Consequently borrowers may decide which option to take
• All bank related costs, attached to the loan, must be amortized, and shown on your TAE

For Mortgage information relating to costs of a loan contact us today

Broker or advice fees

Using a broker in Spain can save you time and money. Help you avoid misunderstandings due to language barriers. Also ensure access to a wide range of products. Generally an independent broker will charge broker fee.

• Brokers can charge upfront fees for their advice.
• It is better for you, if fees are not payable, until production of a suitable financial approval.
• Broker fees, and when they are payable, should be clearly stated in writing
• Brokers in Spain fall into two categories.
• The Broker is obliged to stipulate which type they are. Ones who only work with one or two lenders. In comparison to those that can access the majority of the market.
• Different rules will apply depending on which category the broker falls into.

We make no charge for advice on Spanish mortgages. Nor making an application for a fully underwritten written financial approval.  For more information on our independent services speak with one of our advisers