The numbers involved in buying – example

Property purchase costs

Buying a property in Tenerife will involve lots and lots of numbers! If maths isn´t your strong suit then this can be rather daunting. Here we will look at some of the numbers involved based on the purchase of a property priced at 200,000€.

A standard breakdown would look something like this:

Purchase price:                          200,000€
Mortgage:                                    140,000€
Tax:                                               13,500€ (6.5%)
Mortgage opening fee:              1,400€ (1% variable)
Mortgage deed tax:                    2,520€ (1.8% variable)
Mortgage deed cost:                 1,500€
Purchase deed cost:                 1,350€
Valuation:                                     400€
Mortgage broker:                        1,400€ (1% variable)

Total Costs:                                 222,070€
Mortgage:                                    140,000€
Cash difference:                        92,070€ (This is how much money you need to pay into the transaction)

Typically the costs you need to factor in on top of the sales price amount to between 9% and 11% so in this case at 22,070€ it works out as 11%. As you can see above, some of the costs are associated with the mortgage. Obviously without the mortgage the whole process would be cheaper by around 2%.

Other fees

You may also wish to hire the services of a lawyer or a Gestor as your legal representative.This will typically cost around 1,600€ for a straightforward conveyance and transfer of utilities.

These fees may be higher depending on the complexity of your purchase. For example, mortgages can add to the workload as there is more paperwork to deal with. Older properties tend to create more work as well if the electrics need re-certified for example. There may be other legal issues with the property that need to be resolved, at a cost, before a sale can take place. In these cases your agent should negotiate with the seller about how these costs are split. If you are using the services of a mortgage broker then they may also charge a fee. Sometimes they will be paid by the bank based on the mortgage amount, other times they will not in which case they may charge you more to make up for this difference. Mortgage broker fees typically start from 500€ and can be up to 1.25% of the mortgage amount.

Currency and transfer fees

Buying in Euros when your money is a currency other than Euros can present a problem. Firstly you need to try and change your money at the best exchange rate which is not always easy. Secondly, your bank may make substantial charges for international transfers. One way to mitigate these costs is to employ the services of a professional currency broker who can achieve the best rates for you by monitoring the markets in the lead up to your purchase and advising you of the best time to transfer your funds to Spain. You may be charged “receiving fees” by the bank in Spain so it is a good idea to ask when opening a bank account how these are calculated. Another charge is that for drawing up cheques and bankers drafts. When you go to purchase your property you will have several cheques/bankers drafts with you rather than carrying a bag of cash to the notary. Spanish banks can be very expensive and see this as an easy way to make a quick buck so again, ask before you open the account and ensure these charges are not excessive.