Expenses associated to a mortgage
Welcome, foreign home buyers, to this article dedicated to the costs associated with a mortgage in the beautiful city of Alicante!
If you are considering financing your new property in this lovely Mediterranean region, it is important that you are aware of the additional costs that will be involved in your mortgage process. In this post, we will guide you through the most common expenses you should be aware of and provide you with a practical example so you can better understand their impact on your investment. Let’s get started!
1. Home appraisal
Before granting a mortgage, the bank will require an appraisal of the property to determine its real value. This cost must be borne by the buyer and can vary depending on the value of the property.
How much does a property appraisal cost in Alicante ?
In Alicante, the cost of an appraisal can vary between 200 and 500 euros.
2. Arrangement fee
When taking out a mortgage, it is common for the bank to charge an arrangement fee for the services provided. This commission is usually a percentage of the capital loaned and can vary depending on the financial entity. In Alicante, the typical range of the arrangement fee is from 0.5% to 1% of the capital loaned.
3. Notary fees
The signing of the mortgage deed must be done in front of a notary, and this service has a cost associated with it. Notary fees can vary depending on the capital loaned and the complexity of the process, but are generally in the range of 300 to 800 euros.
4. Taxes and registers
To formalise the mortgage, you will have to pay the Stamp Duty Tax (SDLT) and the property registration fees. The AJD is a tax that varies depending on the autonomous community and the amount of the loan. In Alicante, the AJD can be around 1.5% of the capital loaned.
5. Home and life insurance
Many financial entities require the contracting of a home insurance and a life insurance linked to the mortgage. These insurances have an additional cost that you should take into account when calculating the total costs of your mortgage. The price of these insurances may vary depending on the value of the home and the specific conditions of the policy.
Case study, the real cost of a mortgage in Spain
Let’s take a practical example to better understand the impact of these costs associated with a mortgage in Alicante. Let’s assume you are applying for a mortgage loan of 100,000 euros:
- [x] Appraisal of the property: 300 euros.
- [x] Arrangement fee: 1% (1.000 euros)
- [x] Notary fees: 500 euros
- [x] Taxes and registry fees: 1.5% (1,500 euros)
- [x] Home and life insurance: 500 euros per year.
In this case, the costs associated with your mortgage would amount to approximately 3,800 euros. Remember that these numbers are only an estimate and may vary depending on the financial institution and the specific characteristics of your loan.
How much are mortgage costs in Spain?
In conclusion, when applying for a mortgage it is essential to take into account the additional costs that will be associated with your mortgage.
As William S. Burroughs said, “The function of travel is to guess what you are looking for. On your mortgage journey it is essential to have a clear understanding of the associated costs and to plan ahead so that you can successfully achieve your financial goals.
💡 Remember that it is advisable to seek the advice of an expert in the financial field to obtain personalised information and guidance on the specific costs related to your mortgage in Alicante.
Buy a property in Alicante
Have a successful financial journey towards the purchase of your home in Alicante!
