What are the costs associated with a mortgage?

A mortgage is one of the most common legal procedures in the real estate market, as it allows people to own their own home. Millions of people continue to finance their home purchases and need this legal process to become owners. However, this type of contract entails a series of associated fees and expenses. Do you want to know what they are?

What are the main expenses?

The expenses associated with a mortgage have come down in recent years. The new Real Estate Mortgage Act states that the consumer pays for the appraisal and a copy of the mortgage deed. Banks, therefore, are responsible for paying the expenses associated with the Registry, the Notary's Office, the management and the Stamp Tax related to the mortgage. Excluded are cases of sale, inheritance or any act through which the property is acquired:

Fees and compensation for signing a new mortgage and cancelling the old one: there are also other fees, such as early repayment (which applies if the mortgage is repaid before the established date) or the subrogation fee. Both are regulated by the Property Mortgage Act.

VAT or ITP: it will depend on whether the property is new or second-hand:

• If the property is new, VAT (Value Added Tax) must be paid, the general rate of which is 10%. However, if it is VPO (Subsidised Housing), this percentage is reduced to 4%.
• If the property is not new, that is, if at least two years have elapsed since its first ownership, it is subject to the ITP. The ITP (Property Transfer Tax) is a regional tax, the percentage of which varies depending on the area of Spain where the property is located. Its value is similar to that of VAT, and it is managed by the Autonomous Communities.
• Other expenses associated with the purchase (management, notary, etc.)

Now that you know more about the expenses associated with a mortgage, go to CaixaBank and get the latest news in the real estate market and our CasaFácil.