The costs involved in obtaining a mortgage and loans are:
Appraisal
The bank will call on a professional appraiser to draw up a report on the property’s value, in order to study the viability of a loan. The cost of this valuation will be charged to the client, and for average housing it can cost around 400 Euros.
Arrangement or opening fee
Credit institutions charge a percentage for granting the mortgage. It is a single payment that must be made before the loan agreement is signed.
Home and life insurance
It is compulsory to take out a home insurance policy for the property that is going to be mortgaged, at least against fire. The policy beneficiary must be the bank, so as to guarantee that, in the event of a catastrophe and total loss of the home, the bank will receive the full amount that had been given. Occasionally, the bank may demand that a life insurance policy be taken out and linked to the loan, so that in the event of the owners’ death, the debt will be settled.
Notary and Registrar’s fees
Mortgage loans are constituted by means of a public deed that is signed before a notary. That deed must also be registered at the corresponding Property Register.
Stamp Duty
This is a tax that is applied to acts that are formally laid down in public documents, which must be registered and which entail a financial sum, such as mortgages. It is calculated according to the maximum mortgage liability (the sum of the capital, ordinary interest, late-payment interest, administrative expenses and eventual Court proceeding costs).
Administrative agency
The bank will entrust the processing of the mortgage deed to an administrative agency. This procedure basically involves collecting the document from the notary’s office, settling the tax, submitting the document at the Property Register and collecting it again once it has been entered.
