The adventure of building your own home is very different from buying a second-hand flat or a property off-plan. For this reason, it has a specific mortgage: the self-build mortgage.
The self-builder mortgage works differently from a conventional mortgage and is financed in tranches as the work progresses. However, like any other loan, it comes with some costs.
Below, we will discuss the costs of a self-build mortgage and who should be responsible for each of them.
Home appraisal
One of the first expenses of the self-build mortgage that you will be responsible for is the appraisal of the home, since most financial institutions will grant up to 80% of the value of the home.
Yes, even if it is still just a project, it will be necessary to define the value of the property with an approved appraisal company .
Notary fees
The role of the notary in the mortgage is key, beyond the fact that the loan must be signed before a notary. Their costs range between 0.3% and 0.5% of the mortgage liability.
In this case, the financial institution is the one that must bear the notary fees of the mortgage.
Of course, you will have to pay for your copy of the loan deed.
Administrative expenses
The administrative costs are another expense of the self-build mortgage that is borne by the financial institution and whose cost amounts to 400 euros on average.
Commissions
Some mortgages include a study fee to analyze your case and verify whether you meet the conditions to be granted the mortgage. This fee is increasingly falling into disuse and is only paid if you are granted the mortgage.
Beyond this study commission, self-promoter mortgages may include other commissions typical of mortgage loans, such as commissions for early repayment or subrogation, to give two examples.
Property registration
As with a second-hand home or a new-build home, self-promoted homes and their mortgages must be registered in the Property Registry.
This amount will be paid by the financial institution.
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The Tax on Documentary Legal Acts of the mortgage falls on the financial institution.
In addition to the costs of the self-promoter mortgage, there are also a number of costs related to the house, which are one of the things you need to know before you jump into buying a home . These are the costs of self-promotion, which include:
VAT on housing
Self-promotion of housing also involves taxes and VAT. The VAT will depend on the operation in question.
Generally speaking, amounts paid to the builder will be subject to 10% VAT. This applies to the purchase of materials delivered to the builder or within the construction assembly. If you choose to purchase the materials yourself without doing so as a developer, the VAT will be the general 21%.
Meanwhile, the VAT on the purchase of land will be 21%, unless it is a purchase from another individual. In that case, the Property Transfer Tax or ITP will be paid. This land is another of the costs of self-promotion of housing that may or may not be included in the self-promoter mortgage.
Construction project
This is where the so-called technical fees come in, which include the study of the land, the project and the construction management.
The topographical study of the land usually costs between €1,000 and €1,500, while the project includes the architect's fees, which are usually around 4%-6% of the total cost.
Finally, the construction management will add an additional 2%-3%.
Building permit
In order to build a house, it is necessary to have the corresponding municipal license, the cost of which depends on each town council and represents between 4% and 5% of the cost of materials.
Construction costs
Finally, the construction costs themselves must be added, which will normally be equivalent to 40% of the total budget.
In addition, upon completion of the work, certain procedures must be carried out, such as the deed of new construction, obtaining the certificate of occupancy, the fee for the first occupancy license and processing the registration of the utilities.
One of the particularities of how a self-build mortgage works is that you will not receive all the money at once, as with a normal mortgage. With this type of mortgage, the entity will gradually release the money from the loan so that you can cover the costs of each stage.
