1. Initial Expenses: What is needed before signing?
Home Appraisal
An appraisal is essential so the bank can determine the property's value and the amount it will lend you. This expense, which the buyer must assume, varies between 300 and 500 euros. Although it seems like an unavoidable cost, there are ways to reduce it:
- Free appraisal : Some financial institutions offer a free property appraisal as part of their services. If the bank you're negotiating with doesn't offer this, you could try to negotiate this as part of the process.
- Comparing appraisal firms : If you need to undertake an appraisal, you can choose from several appraisal firms. While the differences aren't huge, some offer more competitive prices than others, so shopping around is essential.
Simple Note from the Property Registry
This document, essential for confirming basic information about the property, costs €9.02. Although it's low, it's important not to skip it, as without it you won't be able to complete the process.
Opening Commission
The origination fee is an expense that some banks include to cover loan analysis and management. This fee can range from 0.5% to 2% of the mortgage amount. However, there is a simple way to avoid or reduce it:
- Pre-negotiation : If you're looking for a mortgage, try to negotiate the origination fee before signing . If you have a good credit profile or are considering several offers, some banks may be willing to waive or reduce this fee to attract your business.
2. Notary and Registry Fees: Keys to Understanding Them
Notary
Although before Law 5/2019, both the bank and the buyer shared this expense, today the financial institution assumes the notary fees. This includes drafting and signing the contract before the notary. The fees, although regulated by law, can vary depending on the amount of the mortgage, but the average is between 0.2% and 0.5% of the mortgaged capital.
Property Registry
The bank also covers the cost of registering the mortgage in the Property Registry, which costs approximately €100. Although this cost is borne by the bank, it's always helpful to know how the costs are distributed throughout each stage of the process.
3. Taxes: More than just the IAJD
The Tax on Documented Legal Acts (IAJD) is one of the taxes that generates the most confusion. Since Law 5/2019, this tax, which is levied upon signing a mortgage, is borne by the bank. However, it is important to be aware of the differences between this tax and other taxes, such as the Property Transfer Tax (ITP), which is levied only on the purchase of second-hand homes.
4. Strategies to Minimize Expenses in the Mortgage Process
Below, we offer practical strategies that very few people mention to reduce the costs associated with signing a mortgage:
- Negotiate additional costs : Although the law allocates costs between the bank and the buyer, certain additional costs, such as copies of the deed, can be negotiated. If you need multiple copies, you can request more copies at no additional cost or reduce the number of copies requested.
- Avoid unnecessary additional expenses : Some banks offer bundled products, such as life or home insurance, to get a lower interest rate. However, these bundles can significantly increase costs over the long term. Before purchasing any additional product, make sure you really need it and compare prices on the market.
- Subrogation and early cancellation : If you decide to change financial institutions or cancel your mortgage early in the future, some lenders charge early cancellation fees. It's crucial to review this point in the contract terms and negotiate it before signing to avoid surprises.
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5. Practical Cases: How to Calculate Fully Transparent Expenses
Imagine you're offered a €150,000 mortgage. Here's how the expenses would be distributed and what you can do to reduce them:
| Spent | Cost (€) | Who pays for it? | Possible form of reduction |
| Appraisal | 300 | Buyer | Negotiate a free appraisal or compare appraisers |
| Notary | 600 | Bank | It cannot be reduced, but it is important to know what the bank pays |
| Management | 350 | Bank | In some cases, you may be able to negotiate for the bank to cover an additional portion. |
| Property Registry | 100 | Bank | It cannot be reduced, but it is important to know what the bank pays |
| IAGD Tax | 1200 | Bank | It cannot be reduced, but the bank assumes it |
| Opening Commission | 750 | Bank | Negotiate its elimination or reduction |
Total to be paid by the buyer : approx. €300
Total payable to bank : approx. €2,900
6. Final Tips for a More Affordable Mortgage
- Review all terms : Make sure you read all the clauses in the contract and understand what expenses might arise in the future.
- Maintain a savings cushion : Make sure you have enough savings to cover your current expenses, such as appraisals and deed copies.
- Compare offers not just based on the monthly payment : Don't limit yourself to comparing the monthly payment, but also all the associated mortgage fees. A deal with a low monthly payment but high fees or additional costs may not be as attractive as it seems.
