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Valuation fee In order to approve a mortgage loan, the bank first needs to conduct a valuation on the property. This is a compulsory step, and costs vary depending on the property price. Expect to pay between a few hundred euros and several thousand. Note that the valuation is usually conducted by a valuer named by the bank, not one chosen by you. Mortgage fee All banks charge a fee for setting up a mortgage and approving the loan. The fee is levied on the amount loaned so the more you borrow, the higher the mortgage fee. It’s worth comparing fees charged by different banks and opting for a lower one, particularly if your loan is substantial. Banks generally charge between 0.5% and 2% of the loan, with the average around 1%. In 2020, the European Court of Justice ruled that the mortgage fee is unnecessary and should not be paid by the buyer, although Spanish jurisdiction has yet to follow suit. Subrogation fee If you are buying a property in Spain that already has a mortgage, you may want to take over the loan yourself. Fees to transfer a loan from the vendor to the buyer are around 0.5% of the loan’s value. Stamp duty Known as Impuesto sobre Actos Jurídicos Documentados in Spanish (AJD), this tax is charged on a mortgage loan. AJD is levied as a percentage on the loan and the amount varies depending on the region of Spain. Notarial fees The notary charges a fee for the title deeds and notary services when you buy a Spanish property. Buying with a mortgage involves
an extra section on the title deeds with the subsequent additional charge. Land Registry fees As is the case with notary fees, Land Registry fees also rise when a mortgage is involved because the loan must be registered as a charge against the property. Paperwork costs The bank will employ a gestoría (professional company providing paperwork services) to pay the mortgage taxes and fees and to register the title deeds. The cost of this varies depending on the size of the mortgage loan and the work involved. Some banks operate with a particular gestoría and give buyers no opportunity to choose an alternative. Insurance policies When you take out a mortgage in Spain, you must also contract insurance for the property covering both the building itself ( continente in Spanish) and its contents ( contenido ). The bank supplying the mortgage loan will offer to provide insurance cover as well, you are not obliged to take out insurance with them, but in practice, you are likely to get better terms and conditions for your mortgage if you do. Your bank may also offer life and mortgage insurance policies. Neither are mandatory for a mortgage loan in Spain, but you may wish to look into these for additional financial security. Always check the terms and conditions of insurance policies and beware of clauses that oblige you to take out a policy with your bank for the duration of the loan. Insurance offered by banks is not necessarily the cheapest on the market. If you are a seller, you will also need to obtain an energy efficiency certificate of the
ILN Real Estate Group – Buying and Selling Real Estate Series
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