What associated expenses generates the purchase of a home
The outlay that must be made for the purchase of a home is probably the highest expense that we have to face throughout our lives. Before starting to count on whether we are in a position to assume it, we must bear in mind that the promotional price does not equal the final amount of the property.
For example, it generally does not include taxes or other fees associated with the transaction that are required to be paid. Nor is it contemplated in that price, if you need it, which means taking out a mortgage with the bank. An operation that is not free of costs and that, to a large extent, is borne by the buyer.
Although all of them are subject to current regulations, they largely depend on the cost of housing, in the first case; and of the mortgaged amount, in the second. Of course, we must not forget the negotiation margin with the bank or the tax rate established in each autonomous community in the payment of applicable taxes.
Expenses for the sale
Even if a mortgage is not requested, there are a series of additional amounts that the buyer will inevitably have to pay. They are those that have to do with the expenses associated with the different procedures and paperwork that are required to formalize the purchase; at the same time as the taxes linked to the transaction, and which vary depending on whether it is a new or second-hand home. Taking into account all of them, it will be necessary to calculate that the amount will increase a little more than 10% over the initial price.
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As with any transaction, this has to be documented before a notary. The loan of this service is identical and does not vary between some professionals and others. Their fees are fixed and can be consulted in the General Council of Notaries, which does allow a 10% discount. The notary is obliged to issue a detailed invoice with its corresponding costs.
The inscription in the property registry of the deed signed before a notary is another procedure that must be completed. Although it is not mandatory, it is recommended. From the College of Registrars of Spain, they indicate that it is the only way for the buyer to be fully protected in the right he has acquired. In other words, that it is considered the sole and true owner or that it is protected before hidden charges. The fees for this management are established by this college.
However, the most significant additional expense is derived from the application of VAT. It is equivalent to 10% of the price of the house, as long as it is new construction or has been completed less than two years ago, and is purchased directly from the developer. In addition, the Tax on Documented Legal Acts (AJD) must be added. This varies between 0.5% and 1.5% depending on the autonomous community. For its part, the properties of resale are exempt from VAT. Instead, the Property Transfer Tax (ITP) is applied. It ranges between 6% and 10% and, again, it depends on where it is located.
All these transactions can be carried out by oneself, but the usual thing is to hire the services of an agency. These professionals will be in charge of doing all the previous procedures. Their rates are not regulated, but the cost will be around € 300.
Expenses for contracting a mortgage
Most new owners have to go through the bank in order to complete their acquisition. The first disbursement that must be made, even before formalizing the signature, is the appraisal of the property. A mandatory procedure to determine the true value of the home. The reason is that most banks do not lend more than 80% of that amount. The validity of the document is three months. The cost of this management varies between € 250 and € 600.
As with the deed of the sale of the home, the public deed of the mortgage loan must also be executed by a notary and registered in the property registry. Tariffs, as we anticipated above, are regulated and set by the Executive. Although, yes, they depend on the value of the mortgage.
Again, the procedures are carried out by an agency. Although on this occasion it is mandatory to hire it, contrary to what happens with the paperwork related to the sale, it is the bank who is in charge of selecting it. For this expense, the entity will ask the client for an economic amount as a 'provision of funds’. With this money, he pays the expenses of the notary, agency and property registry. The estimated amount is usually higher than the real one, so it is usual for the difference to be paid to the buyer once all the procedures have been completed.
There are other expenses that are usually associated with the granting of a mortgage, although they fall within the negotiation with the bank. These are conditions whose acceptance implies a reduction in the monthly fee, such as the contracting of home and life insurance. These policies are paid annually and their amount depends, again, on the value of the loan.
Finally, to calculate the extra costs involved in acquiring a home, it must be taken into account that some entities are resuming the collection of opening commissions, especially since the approval of the decree law that obliges banks to pay the IAJD which also taxes mortgages. After adding all these associated expenses, it will now be possible to calculate the final amount that will have to be paid for the purchase of the home.