Costs when buying a home

To be well prepared when buying a home, here is a summary of all the costs you will incur.

If you are immersed in the adventure of buying a home (Have you already found the perfect place to move to?) you will certainly be interested to know the costs that you will have to face apart from the price of sale. Considering them will help you to know if the operation is within your expectations and ignoring them may cause you some unpleasant surprises when it comes to taking the step. Below, we detail all the implicit costs when buying a home and you will know with certainty the maximum amount you will be able to spend on this important investment:

To the selling price of a house, we must add approximately 13% of additional costs.

Taxes

For the calculation of taxes, it is necessary to distinguish whether the property is new or second-hand. In the case of new construction, the purchase will be subject to two taxes:

• VAT (Value Added Tax) of 10% in general and 4%, reduced, in the case of subsidised housing, although the latter may vary depending on the autonomous community. The exception is in the Canary Islands, where the tax is called IGIC (Impuesto General Indirecto Canario) and is 6.5% in general and 3% in social housing.
• IAJD (Impuesto sobre Actos Jurídicos Documentados) which varies depending on the autonomous community: from 0% in the Basque Country, to a maximum of 1.5% in Andalusia, Aragón, Cantabria, Valencia, Extremadura, Galicia... This tax should not be confused with the IAJD on mortgage loans which from June 2019 in application of the Law 5/2019 of 15 March 2019The bank shall bear the costs of the real estate credit agreements.

In the case of used housing, the tax will be:

• ITP (Impuesto sobre las Transmisiones Patrimoniales), which also depends on the autonomous community and ranges between 4% and 10%. This tax has a lower percentage if it is a social housing, if the buyer is under 35 years old, if he/she has some kind of disability, in case of a large family...

Notary

In all home purchases, whether new or second-hand, a notary must be involved to draw up the deed of sale. This will be chosen by the buyer and its cost, also known as a fee, is regulated by the State and ranges between €600 and €1,000 depending on the purchase value.

Land Registry

The deed drawn up by the Notary must be registered in the Land Registry. As above, this fee is fixed by the State, depends on the value of the property and is between 250 and 700€.

Gestoría

These formalities of registering the deed in the Land Registry and other paperwork can be contracted out to a gestoría at a liberalised cost of between €200 and €350.

Mortgage expenses

If mortgage financing is required, the following costs are incurred:

• Mortgage appraisal80%: banks normally finance an 80% of the lower of the purchase value and the value of the property, depending on the bank. And to know the latter, you have to hire an appraiser to carry out a mortgage appraisal. The cost varies between €250 and €600 and depends on the value of the property and the appraiser. It is valid for 6 months and can sometimes be used to go to different banks in search of the best financing.
• Mortgage origination feewill depend on the bank and is around 2% of the value of the mortgage. This is also where each bank comes into play and can sometimes lower this percentage considerably.

To buy a home with financing, we must have 33% of the purchase value available. 

* Let's take a practical example: Let's suppose that we are going to buy a 200,000€ second-hand property in the Valencian Community, that we do not have access to any type of aid or subsidy, that we will need bank financing, and that our allergy to paperwork leads us to hire an agency. In this case, as expenses we will have:

10% of the ITP on the purchase price: 20.000€.
Notary fees: approximately €700.
Land Registry: approximately €250.
Agency: 200€.
Mortgage appraisal: €450.
Arrangement fee: €4,000.

This gives a figure of €25,600, i.e. around 13% of the value of the property to be purchased. If we add to this the 20% of the value of the property that the bank will not finance, i.e. €40,000, we arrive at a total of €65,600. This means that to buy the house with financing we must have available the 33% of the purchase value.

Figures not to be taken lightly! If you still have doubts and want to be in the best hands, contact us and you will have everything under control.