When we are going to ask for a loan, there are things that we cannot overlook. For example, taxes and other additional costs. In other words, expenses that are not only related to the price of the property. Although it may not seem like it, they can represent between 10-15% of the purchase price. And in this article, we are going to explain in detail what these opening costs are and how we should assume them.
Opening a mortgage also has its costs
Depending on the bank, these opening costs will be one or the other. The 2019 mortgage law regulates some of these costs, dividing them between those that the bank must pay and those that correspond to the client.
One of the fees that entities can still charge is the opening fee , according to article 14.4 of law 5/2019. This fee can only be charged once and must include all the costs associated with the processing, study and granting of the loan. In addition, any expense of this fee must be justified and linked to a service provided by the entity, such as the analysis of the client's application.
Taxes when buying a home
Buying a home also means taking on a series of extra expenses, which will vary depending on the type of home: is it new or second-hand?
In the case of new housing, the well-known Value Added Tax or, in other words, VAT comes into play. There are two different situations: free housing, it is 10%. If it is a social housing, it is 4%.
If it is a second-hand property, we change the VAT for the Property Transfer Tax (ITP). This varies between 5% and 10%, depending on the autonomous community and whether it is the first or second residence.
In addition to these taxes, when buying any home you must also pay the Tax on Legal Documents (IAJD) . However, this tax is not paid on second-hand homes, as it is incompatible with the ITP. In the case of a mortgage, the bank assumes the payment of the IAJD corresponding to the constitution of the loan.
Expenses associated with the establishment of a mortgage
The costs of establishing a mortgage are also regulated by the 2019 law, which establishes that most of these costs must be assumed by the financial institution:
• Bank charges : Notary fees, agency fees, IAJD related to the mortgage and its registration.
• At the client's expense : The cost of the appraisal of the property and any additional copies of the deed that the client may require.
Other expenses when taking out a mortgage
In addition to taxes and incorporation costs, there are other important expenses that must be taken into account.
• Appraisal : To determine the value of the property on which the mortgage is being established, an appraisal must be carried out. This is required by law and costs between 250 and 500 euros.
• Notary fees : The notary's fees, who will be responsible for certifying both the sale and the mortgage, usually exceed 1,000 euros and are calculated based on the mortgage liability.
• Property registration : This is the cost of registering the mortgage in the corresponding property registry.
Finally, if an opening fee has been agreed with the bank in the contract, this will be calculated as a percentage of the capital lent, and will vary depending on the financial institution.
In short, applying for a mortgage involves not only paying the price of the property, but also assuming various taxes and additional expenses that you must take into account to calculate the total cost of the operation.