What expenses should you assume when you acquire a home and start living in it?
The purchase of a home is surely the most important economic decision that we face throughout our lives. Sometimes we appear before this action ignoring numerous aspects before such disbursement.
It is also usual to hesitate between choosing an own appraiser or notary, or accepting the one offered by the bank.
The bank in this case is our main borrower in more than 60 % of cases, and even before we can start with the normal expenses to assume, we link to a certain entity with the much-hated mortgage.
However, there are many more expenses to deal with before buying a home and then while we live there.
Therefore, in this article we are going to tell you what these expenses are and what they are about.
New or second hand homes
The expenses assumed by the buyer are not equal if it is a new address to enter to live (first transmission) or on the contrary it is a second-hand dwelling (second or subsequent transmissions).
Mainly it is estimated that the expenses associated with the acquisition of a home are between 10 % and 15 % of the value of the property, this means that if the price of the house is € 240,000 the associated expenses will be above the € 24,000.
Although the only way to save on these expenses is the cash payment of the entire amount, it is probably one of the most utopian situations with which we would not find in these transactions.
To better understand all the costs involved in the acquisition of a property, we will expand the previous example, breaking down each and every one of the expenses.
Data: Price of the house € 240,000, to meet the cost we ask for a standard mortgage with 70% financing.
In this case, the Bank lends us € 168,000.
Broken down this first, we will face the expenses of the sale and then go paying the mortgage in the long term.
This is the first major disbursement to face. In cases where the home is first transmission then, the subject has to pay 10% of the value of the home. In this case, € 24,000.
The notaries apply a fixed tariff established in 1989 and without revision since then, the cost in these is higher than € 450, although it is true that some notaries can get a discount of 10 %. In this case, the cost would be close to € 400 approximately.
Notary fees include:
- The public deed of purchase-sale
As we have mentioned before, it is an expense with a fixed amount, except for a discount, but the truth is that it can still vary more if the buyer, in addition to housing, acquires a parking space or a storage room.
This expense, established by the Government in approximately € 224, constitutes the expense for registering the property in the Property Registry. This expense is not mandatory initially, however it is advisable.
This will be paid as long as it is necessary to request a mortgage to cover the purchase costs of the home.
The cost will depend on the rates of the contracted agency, it is in this place where they are responsible for processing everything necessary to register the property in the Land Registry. Approximately we have an expense of around € 400, being 25 % more expensive if it is an external agency that recommends the bank.
So in this case and before a new acquisition of a house, the total expense before the mortgage would be
€ 24,000 VAT + € 450 notary + € 224 registration + € 400 management agencya = € 25,074 of expenditure.
Tax on Capital Transfers and Documented Legal Acts
The cost in TCT or DLA is calculated in values that exceed the minimum of € 1,000. This amount is regional, so it will vary depending on the autonomous community in which the home is acquired. Therefore, it is not necessary to think that if I already buy a house in Andalusia and acquire a second one in Extremadura, the DLA will be the same.
This expense is subject to bonuses as long as certain requirements are met, such as:
- That the buyer is less than 35-36 years old
- Large family
- Disability equal to or higher than 33 % and less than 65 %
- Or that the housing is in a rural nucleus
It is the tax that taxes the purchase and sale of second-hand homes, its amount varies between 6 % and 10 % of the deed value of the home, and always depending on the autonomous community as we have previously mentioned.
So following our example, this payment would be between € 14,400 and € 24,000
It should be noted that property transfers for valuable consideration and corporate transactions are subject to this tax.
Understanding by property transfers for valuable consideration those as purchase-sale of furniture or real estate, real rights of usufruct and leases.
In this tax we find the figure of the passive subject, which is the purchaser of the good or right and therefore the person in charge of the disbursement.
In terms of notary fees, agency and registration will be the same as in new homes.
Thus, the breakdown of the total value of this acquisition will be as follows:
€ 24,000 of TCT / DLA + € 450 of notary + € 224 of registration + € 400 of agency = € 25,074.
The mortgage is an income of that loan that we originally requested at the bank to cover the cost of purchasing the home.
Before being able to acquire a mortgage, it is necessary to face a new expense. This is the cost of Appraisal.
Cost of Appraisal
Everything that an appraiser carries out to offer a house price is included in this expense, however the client can choose his own appraisal entity and assess which bank offers him a better mortgage option, before six months which is the date Validity of the appraisal.
In addition to these expenses we find the following.
Land registry report (nota simple)
With an approximate value of € 18, it is a document that the bank or the agency ask the Land Registry to check all possible data on the property to be mortgaged, some data such as:
– Property of housing
Opening of registration sheet
This document provides the notary the telematic activity of presenting the documentation. Its value is approximately € 30.
It is a value that banks charge at the beginning of the mortgage as a commission against the borrowed capital being between 0 % and 2 %. Following the example, it would be € 4,800.
In addition to these costs, we will add those related to notary and registry.
Also DLA, this tax is also paid in cases where a mortgage is requested, since it is paid whenever a notarized document is registered.
The mortgage liability that is faced is at a value of 150 % of the house, however, is usually paid 1 % of this value.
Continuing with our data. The mortgage liability would be an amount of € 360,000, at the beginning the buyer faces the amount of € 3,600.
Once you have started to live in a house, the main expenses incurred are, apart from the corresponding mortgage payment, the IBI and the expenses for the delivery of supplies.
Tax on Real Estate or IBI
It is a local tax, which is mandatory collection by the municipalities; this expense taxes the value of the owner and other rights attached to property comes located in the collection locality. This tax is shared between the State Administration and the Town Councils.
Costs of supplies registration
Collected in Royal Decree 1995/2000 of December 1, these costs are associated with a new contract or discharge after more than three years without using the supplies.
Other expenses may be added to these expenses, such as the purchase and installation of measuring equipment or collection of fees.
Throughout the use of the supplies we will incur expenses of the own supplies where it will be paid for the use of them or the use of connections of the supply companies.
Now you know what the main expenses that you will face when buying a home are. If you are still having doubts, in DeluxEstates we will be happy to help.
Posted on 11/12/2017