Taking out a mortgage loan is the most common method of acquiring a home when one does not have the
necessary capital to pay for it otherwise. Moreover, hundreds of mortgage loans are entered into yearly, making
them one of the most common banking products in the real estate market.
Although the workings of a mortgage loan are known to almost everyone, the Bank of Spain describes mortgages
as follows: "A credit institution will lend you a sum of money in exchange for your commitment to repay it in the
long term, with interest, through periodic payments (usually monthly). In these loans, the institution has a specific
guarantee to recover the loaned amount: a mortgage on the acquired property. If you fail to repay your debt,
the institution can sell the house to recover the outstanding amount."
Thus, with a mortgage loan, you repay the borrowed money plus the interest, usually collected during the initial
years. However, before doing so, there are mortgage fees to consider as they represent an expense before
formalizing the mortgage.
Mortgage fees for the client or the bank?
The question that arises regarding these mortgage fees is usually whether it is the client who must bear them or
if, on the contrary, the bank is responsible for them. It is not surprising that there are doubts about this matter,
as there were certain modifications through Law 5/2019 of March 15, which regulates mortgage credit agreements and made a positive impact on buyers.
"The law establishes the distribution of fees associated with the conclusion of a mortgage. Therefore, all
contracts concluded since then stipulate that the client must pay for the property valuation and notary fees for
the copy of the mortgage deed if requested," explains the Bank of Spain on this subject.
What do clients pay for?
Therefore, since the entry into force of this law, the mortgage fees in Spain for clients applying for a loan are as
follows:
● Property valuation: Before formalizing the mortgage contract, the bank requires an appraisal of the
property you wish to purchase. An appraiser approved by the Bank of Spain will carry out this valuation
which usually costs between 300 and 500 euros. The objective is to know the property's value for the
bank to calculate the amount it can lend. The objective is to know the property's value for the bank to
calculate the amount it can lend.
● Simple note: It contains essential information about the property, such as identification, ownership,
area, charges, and mortgages. The person applying for the mortgage must obtain it from the Property
Registry. Its cost is 9.02 euros.
In addition to these two mortgage fees, a third one could exist that depends on the bank with which you sign
the mortgage, as it may include opening fees to pay only once. This fee varies from 0.5% to 2% of the borrowed
capital. However, not all banks charge these fees; it will depend on their offers or the client's negotiation ability.
What do banks pay for?
On their part, banks must also bear certain costs before formalizing the mortgage loan. The Bank of Spain also
explains: "The institution will bear the costs of the management office, those related to the notarial deed of the
mortgage loan, registration fees, and taxes." Indeed, the notary fees and the Tax on Documented Legal Acts
were the ones that experienced the main changes compared to mortgages before 2018.
That being said, the mortgage fees borne by banks when approving a mortgage in Spain are as follows:
● Notary fees: While previously they were split equally between both parties—the client and the
bank—now it is the bank that bears these costs when formalizing the mortgage in a public deed. A notary will be in charge of this task, whose fees are set by law and depend on the type of property and its price.
● Registration fees: The Property Registry is where mortages must be registered, so the cost of this operation also falls on the bank.
● Management office fees: Specialized managers who charge their honoraries to the banks are usually in charge of all the procedures involved in signing a mortgage.
● Tax on Documented Legal Acts: Finally, it is the banks that must pay for the IAJD, which varies between 0.5% and 1.5% of the mortgage liability, depending on the autonomous community where the operation is carried out.
