Charges during a property purchase
When purchasing a property in Spain it is important to understand the fees involved and timing of these payments.
For the vast majority of purchases then the fees will be as set out below:
a) For the “stamp duty” or property transfer tax – 7 percent of the value put into the deed of sale/escritura, as signed in front of the Notary.
b) A fee for the time in the office of the Notary, with a guideline of €100 plus IVA at 16percent for actual time in the office, excluding waiting time. Add to this documentation costs such as the Copia Simpla of the deed of sale.
c) A set fee of 1,25percent of the declared sales value as the Notary fee.
d) A fee for the registration of the change of ownership of the property in the local Property Register – this varies from €250 up to over €1000 and depends upon the sales value and any charges registered against the property. IVA at 16percent will apply.
e) If a mortgage is required for the purchase then there is a “stamping and registration fee” on a scale of between 1,25 percent to a typical 2,25percent of the mortgage advance made. The larger the loan then the smaller the percentage fee, typically! This loan documentation also has to be registered at the local Property Registration office. The fee for this is typically around €200.
f) In order to obtain a mortgage then the lending institution will require a formal valuation of the property by an independent, approved valuer. Typically 0,25percent of the valuation, although some valuers work on a set fee basis irrespective of the property value.
g) The lending institution, typically a bank, will employ a legal go-between, referred to as a gestior, and there will be a fee for his/her services which will be time dependent.
All of the above fees and charges will be estimated by the bank (if you are using one for mortgage funding.) In general the bank will over-estimate the charges by a margin (typically around €600 to €1000) and this together with the above charges will be charged to a borrower’s bank account on the day of the purchase, although the valuation fee may be charged beforehand. Some 6 weeks to 6 months after the day of purchase the bank will issue a formal charge statement and account for any refund to a borrower. The bank will arrange (generally through the Notary) for the certificates to be lodged at the Property Register of the local council.
h) If the property is a second hand property, e.g. previously owned and subject to any mortgages or secured loans registered then there will be charges for the paperwork involved in discharging these loans and ensuring that such details are specified in the Property Register.
i) Using a lawyer – which we recommend as essential - will mean an additional charge and typically this is around 0,25percent of the property value, although this can sometimes be negotiated as a fixed fee.
In all if buying with a mortgage then you should budget for about 11,25percentto cover the above fees and charges.
If you are purchasing without a mortgage then (e) will not apply although unless you are going to take along wads of cash a bank certified cheque will be required – around another €100.
Some of the above charges can be negotiated downwards and depend upon your negotiating abilities!
This will also apply when you negotiate with your mortgage provider who will start out by wishing to charge you an opening fee of 1percent. This can be negotiated down to a more reasonable 0,50 percent.
Also be careful to understand what charges might apply for early redemption of a mortgage loan, again the lender will want to start out with a 1percent penalty but this can be negotiated away to a significant extent.
These negotiations are where SPS can help!
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