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€
Tax – 6.5%:                                   13,500€
Purchase deed / registry:              1,350€
Bank fees:                                        300€
Legal fees:                                     1,700€

Total Costs:                                  16,850€

Typically the costs you need to factor in on top of the sales price amount to 8% – 8.5% if buying with no financing and around 10% with a Spanish mortgage.

WARNING! There is a well known estate agency in Los Cristianos (and there may well be others) how charge a “flat fee” of 10% of the purchase price. Basically, they know very well the costs will be much lower but will happily take 10%, pay the taxes and fees and keep the change. On a purchase price of 200,000€ – this could be as much as 4,000€!!! Do not agree to this if asked – it really is a very dishonest and underhand way of taking money from you which they are not entitled to.

Other fees

A legal representative may charge more if you are purchasing with a Spanish mortgage as this is quite a lot more work on the legal side. 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 750€ but 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. 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. Some sales completions can be carried out by transfer, it really depends on the legal representatives, some don’t like / understand this so won’t do it, others will.