What expenses must be paid when buying a home with and without a mortgage?

To buy a home it is necessary to have savings and also sufficient income to meet other expenses for the operation.

When acquiring an apartment or a house, of course, you must have enough money to pay what the seller asks, either in cash or with a mortgage. And also, and that is something that not everyone knows, it will be necessary to have enough savings and income to face other costs related to the operation. But what are the expenses associated with buying a home? According to the financial comparator HelpMyCash.com, it will be necessary to pay those generated by the deed and registration of the new property, for the constitution of the possible mortgage loan and, in addition, for the maintenance of the property.

Let’s start with the expenses associated with the formalization of the home purchase. To close the operation, a public deed must be signed at a notary’s office and a manager will have to take it to the Land Registry for the new owner to be registered. In addition, the Treasury will want to keep its part of the pie by collecting the corresponding tax.

The notary, the registrar, and the agency will charge a fee for their services, while the Treasury will demand the payment of the value-added tax (VAT) and the tax on documented legal acts (IAJD) if the house is new, or the tax on property transfers (ITP) if it is second-hand. Together, according to HelpMyCash, all these invoices have an average cost equivalent to 12% of the value of the property, so the acquirer must have enough savings to pay that amount.

For example, if a person wants to acquire an apartment that costs 250,000 euros, the expenses associated with the purchase of that property would amount to approximately 30,000 euros (12% of 250,000 euros), so that potential acquirer must have that money saved if wants to carry out the operation.


These purchase and sale expenses will have to be paid whether the house is purchased in cash or if the operation is financed with a mortgage. However, in the second case, the cost of the home appraisal (about 300 euros on average) and the cost of the copy of the mortgage deed (a few tens of euros) must also be paid. The rest of the costs associated with the formalization of the loan (notary, registry, agency, and IAJD) must be paid by the bank by law.

It is also possible that the bank granting the mortgage wants to charge an opening commission, the average cost of which is usually between 0.5% and 1.5% of the amount borrowed. Currently, however, most entities no longer apply this charge. A good example is the Fixed Mortgage of BBVA (one of the banks with the most clients in Spain), which has no opening commission and has an interest of 1% in exchange for direct debit payroll and take out home and life insurance Of the entity.

Although it is not an expense in itself, it must also be borne in mind that banks do not usually cover the entire purchase of a home. In general, they finance up to 80% of the acquisition (excluding the aforementioned purchase and sale expenses), so it will be necessary to have savings to pay the seller the remaining 20%.


Once the sale is closed, other expenses will have to be faced just for owning the home. Among them, the real estate tax (IBI), the different municipal rates, or the home insurance premium, the cost of which will depend on the town where you reside and the rates applied by the insurer. Therefore, before acquiring a property, it is convenient to calculate how much these costs would amount to see if they could be paid without problems.

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And of course, if the purchase has been financed with a mortgage, you must pay your installments and the price of the products contracted together with the loan (insurance premiums, account commissions, etc.). The cost of these expenses, of course, can be reduced if a mortgage loan is contracted with a good interest rate and few additional services. A good option, in that sense, may be the Openbank Fixed Open Mortgage, whose interest is from 1.30% in exchange for direct debit of the income, and subscribe home insurance with the entity.

To find offers as or more attractive than the one mentioned, HelpMyCash advises you to go to a minimum of three financial institutions and compare their proposals to find out which one would pay the most. They also recommend negotiating with the banks contacted to try to lower the price as much as possible.

By Cary Grant

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