What Costs Come with Buying a Home

Are you going to buy a home? If you are looking for a home, on top of the price agreed with the estate agent you must add a series of costs that come with buying the property. It is important to take them into account because otherwise the final outlay may go beyond your budget. Let’s look at the total costs of buying a home.

The home-buying costs you must cover

First of all, here are the purchase costs the buyer must cover when acquiring a home:

Nota simple (land registry extract)

The nota simple is used to check whether the property is free of charges and encumbrances. Requesting it is not mandatory, but it is one of the purchase costs most worth paying if you want to avoid complications in the future. There are various companies through which you can request a nota simple online, and it costs around €20.

Valuation

Valuation fees are essential. A valuation is a professional appraisal of the property. You can turn to specialist companies to value any property, such as Tinsa or Euroval, although banks often include the valuation fee among their administrative costs when you take out a mortgage. To give you an idea, this can amount to around €500 for a 90 m² flat.

Taxes

Now it is time to talk about taxes. Let’s see how much they weigh in the total costs we must consider when buying a home:

• Property Transfer Tax (ITP, Impuesto sobre Transmisiones Patrimoniales). This tax is only paid on second-hand homes. It is a percentage applied to the price stated in the deed and also depends on the autonomous community. However, it is almost always between 6% and 10%, with exceptions where it may be reduced, such as for large families or protected-price housing (VPO).
• Value Added Tax (IVA). VAT is paid only when buying a new home and amounts to 10% of the value of the transaction, except for officially protected housing, where it is 4%.

Land registry

Land registry costs are actually borne by the bank when a mortgage is taken out to buy the home, and amount to between 0.1% and 0.3% of the mortgage liability. However, the buyer pays them if no mortgage loan is taken out, in which case the cost usually ranges between €24.04 and €100, depending on the price of the home, in accordance with the fees set by Royal Decree 1427/1989.

Mortgage arrangement fee

The arrangement fee is a cost you must cover if you take out a mortgage with a bank. This fee is paid only once and covers all the costs the lender may claim for assessing, processing and granting the loan. It ranges between 0.5% and 1% for variable-rate mortgages and can reach 3% for fixed-rate mortgages.

Home insurance

Taking out home insurance is mandatory if you obtain a mortgage, including at least the basic cover. In fact, it is a contract that brings great benefits whenever you buy or rent any type of home, and even more so when buying a second-hand one, as these carry a greater risk of unforeseen problems in the future.

Renovation

Beyond the purchase costs themselves, others may be added. If the property you have bought is second-hand, it will very likely need renovating before you can move in, even more so if you want a sustainable home. This cost can vary considerably, depending on the condition of the property, your aspirations and the quote from the renovation company in question. It is also worth noting that kitchen and bathroom renovations tend to be more expensive.

Costs the bank is responsible for when buying a home

Careful! There are a number of costs that traditionally fell on the buyer when purchasing a house or flat with a mortgage. However, since Law 5/2019 came into force, the legislation makes clear that these costs must be borne by the relevant bank. It is important that you know about them too:

Notary

The notary’s fees are paid by the bank. They can usually reach €800, depending on the value of the property. These are the notaries’ fees and the cost is regulated by the State. However, if the customer requests a copy of the deed, they must pay for it, usually around €20.

Gestoría (administrative agent)

Gestoría fees are not mandatory and correspond to a service that is usually hired only when taking out a mortgage, to handle the relevant paperwork. Banks take care of hiring an agency, which charges them around €300.

Stamp duty (IAJD, Actos Jurídicos Documentados)

This cost is a tax for the use of notary services and registration in the land registry. Its value depends on each autonomous community, although it is usually between 0.5% and 1.5% of the purchase price.

To conclude, let’s look at an example: the purchase of a second-hand home through a fixed-rate mortgage loan.

Costs	Amount
Price of the home	€100,000.00
Fixed costs	€540.00
Taxes	€8,000.00
Arrangement fee (3%)	€3,000.00
Home insurance	Depending on your choice

In this case, the costs amount to around €540 in fixed costs. In addition, assuming the price of the home is €100,000 and the ITP in your autonomous community is 8%, you would have to pay a further €8,000 in taxes. To this must be added 3% for the arrangement fee, which in this example would be €3,000. So the total costs associated with buying the home would come to about €11,540. And, as we have explained, to this figure you would have to add the cost of insurance and renovation, which will depend above all on the condition of the home and your preferences.

Do the numbers add up for you? Check these figures before closing the deal!