Homes On The Costa Estate Agents in Marbella work alongside mortgage and financial partners who are totally independent and fully qualified to give our clients specialist unbiased advice that you may need about Spanish Mortgages and Spanish Insurance. At Homes On The Costa, we realise that all our clients and needs are different and that their individual circumstances differ, so to help you our Financial Expert offers you a no-obligation consultation which will give you the chance to decide if taking a Spanish Mortgage is for you. Below is a breakdown of the costs involved when taking a Spanish Mortgage.
Before granting a mortgage a Spanish lender will require that the property be valued by one of their appointed valuation companies. This can cost anything from a few hundred Euros to over a thousand Euros depending upon the value of the property. The person applying for the Spanish mortgage has to pay this cost.
Before a Spanish mortgage lender will grant a loan on a property it will insist on seeing a nota simple (land registry filing) that confirms that the property does not have any other unexpected debts attached to it. However you (or rather your lawyer) will need to request a “nota simple “ from the land registry for you own sake so this can be considered a non-differential cost that you would face with or without a Spanish mortgage.
Most Spanish mortgage lenders charge a fixed fee for setting up a mortgage. This is typically 1% of the value of the mortgage, but can range from 0.5% to 2%
There are three types of insurance to consider when arranging a Spanish mortgage. The first is general house and contents insurance. This is a legal requirement of Spanish mortgages and the lender must appear as the beneficiary of the house insurance. The amount of insurance required will be established by the valuation, and the insurance value will not be the same as the value of the property. The insurance value is the amount required to rebuild the property, clearly that will not include the value of the land as that would still exist.
The other two types of insurance are life insurance and mortgage insurance. In both these cases insurance is not mandatory (as it is for house/building insurance), however it is worth considering them asnot only is it important to have appropriate insurance cover but it will also help when negotiating better conditions for your Spanish mortgage. The costs of the insurance is based on your age and the loan amount and can vary from bank to bank. Generally speaking insurance is cheaper than the UK.
If a Spanish property has a mortgage secured against it this has to be declared before a Notary. Notary fees are based on the number of clauses in the deeds and a mortgage deed will have approximately the same number of clauses as a purchase deed. The notary will charge for this and therefore a Spanish mortgage increases the Notary costs at the time of signing the public deeds of sale.
Likewise the existence of a mortgage on a Spanish property (the mortgage is seen as a debt against the property) must be registered with the land registry. This slightly increases the land registry fees when buying property in Spain. The fee for registering a Spanish mortgage is approximately the same as the fee for registering the property.
This is a tax paid to the government and is calculated as a percentage of a Spanish mortgage. The amount can vary from region to region and vary according to the amount of the mortgage.
This is a fee payable to the company (gestoria) who arrange for the deeds to be inscribed correctly in the local land registry. Lenders will normally insist on using their chosen “gestoria” as they need to be absolutely sure that both the property and the mortgage have been properly registered. This should not be more than a couple of hundred Euros.
Spanish mortgage lenders do not like it when a client cancels a mortgage early (for instance if they have found a cheaper mortgage). Therefore they often impose a cost on early cancellation. It is common to find early cancellation fees of 1% of the value of a Spanish mortgage, though a good broker can find you a Spanish mortgage with little or no early cancellation fee. From the client’s perspective a Spanish mortgage without this fee is preferable as it makes the Spanish mortgage more flexible.
Some Spanish mortgage lenders try to penalise clients who pay off part of their mortgage early. This is known as partial cancellation and will often carry a financial penalty related to the amount that is paid back early.