Mortgages are one of the banking products that entails the most expenses in their management. Because of the amount demanded that will have to be returned with its corresponding interests, there are others that are generally not counted on. But that without a doubt that it will do it will increase the final cost of this means of financing for the purchase of a home. Even some of them will have nothing to do with the mortgage itself, if not with its administrative procedures. To the point that you will have no choice but to pay between 2% and 5% of the budgeted amount.
Mortgages, unlike the more conventional lines of credit, generate a series of disbursements that go beyond their mere formalization. It can cause you some other scare when facing its regularization before the financial institution. For this precise reason, it is very important that you know the expenses that arise from your hiring. So that in this way, you don't have any negative surprise once the mortgage loan is signed. Because in some cases, it can misalign the budget you have for each year.
From this general scenario, it will be very convenient for you to analyze where your money is going to go when you go to buy a house or apartment. Do not think that you will only have to pay interest, because it really isn't. Mortgages present expenses that are distributed through a series of very diverse sections and that makes this financial product one of the most expansive in the financial market. In this sense, they have nothing to do with consumer or personal loans. There will be some very clear differences that you will have to take into account from now on.
Mortgage contracting: commissions
Of course, commissions is the first item that will require a greater economic effort for your part. These types of fees can be of various kinds, although they are not fully applied in all cases. Those of study, opening, subrogation or early cancellation are some of the most common in its commercialization. With an amount that varies depending on the proposal of each bank, but generally ranges between 0,5% and 2% of the amount demanded. In this sense, it will be very important that you inform yourself what are the commissions that include the mortgage that you are going to hire.
In any case, at this time and due to the cheaper price of money, it is very common for new mortgages to be exempt from this payment. As they are marketed free of these bank fees and with better spreads compared to other years. To the point that in the current mortgage offer you can find credit lines of these characteristics below 1%. This is one of the main consequences of the European benchmark, the Euribor, being at historic lows. Specifically in a negative situation and is listed on the financial markets at -1,62.
How much can you suppose?
As a consequence of its application, commissions on mortgages can generate an increase in the money that you will have to allocate to satisfy the purchase of a home. As a guideline, for a 100.000 euro mortgage, it will mean a additional expense of around 2.000 euros that you will have to assume when signing the contract with the bank. Not all credits involve the same expense, but you should look for the least expansive model in this kind of expense.
On the other hand, and optionally, there is also the cost of purchasing home insurance. Not in vain, it will help you protect you from possible contingencies that may arise. For example, water damage, glass breakage or even damage to third parties. In any case, the only policy that will be mandatory is the fire policy. With an annual cost of between 100 and 500 depending on the coverage included in this product. All the rest are not required to subscribe. Unless it is a requirement to discount the interest rate that will be applied to you for this financial product.
Administrative procedures: more expenses
Do not think that with these expenses that I have explained so far the disbursement that you will have to assume for any of the subscribed mortgages has finished. Because it is not like that, since they require a very special kind of management and that we are going to explain to you from now on. All of them are derived from administrative procedures or procedures linked to the purchase of a property and that are always necessary to formalize. One of the most important is the reference point to the scriptures. Through various models such as those indicated below.
- El sales contract or deposit: it is necessary for the property to pass to the new owner and must be formalized before a notary's office.
- House deed: in this case, your need to sign it will come from the fact that it is one of the basic requirements to protect your rights as a buyer.
In both cases, you will have no choice but to go to the notary so that you can have it available along with other documents. In any case, it will be another source of expenses when buying an apartment. Although on this occasion, the fees of the notaries are freely assigned. However, for an average operation it will have an outlay that will vary between 400 and 1.000 euros.
Other additional expenses
There is also another series of disbursements that you will have no other solution than to complete them at the time of starting the real estate operation. They basically have to do with the administrative management of this complex process. Of course, it will not be a very demanding amount, but it will help you have to raise the budget that you will have to allocate to this social need. Some of the most important with which we mention below.
- Property registration: You should not forget either since it is completely mandatory that you face the annotation of your operation in the Property Registry. Not in vain, it will be the document that will help you prove that in the end you are the new owner of this material asset. The cost of this management will always be below 700 euros. With little impact on the overall amount of the operation or economic transaction.
- Management costs: it is a professional service that will be in charge of coordinating all the phases of the process that involves the acquisition of a real estate asset. Under an amount that is never fixed, if not, on the contrary, it will depend on the agreement you reach with the agency. Although in any case, it will not cost you more than 300 or 400 euros. With the advantage that it will improve that the process can be carried out through their services.
Penalties: especially in breaches
There is another series of very relevant expenses that are only generated if you breach some of the clauses of the contract. Like for example, if you decide pay off your credit in advance mortgage. You may be forced to carry out these operations, but knowing that the bank will apply a commission to settle the credit early. Normally they charge you between 1% and 2% on the amount that you have left to return.
In any case, you will need to check if this movement it will be profitable. Because not in all situations it will be convenient for you to perform them under these conditions. Where your percentage will be a factor that can cause the expense of mortgages to skyrocket in a completely unnecessary way. Among other reasons, because you can vary the monthly fee to adjust to your real needs as a user. Without the need to prematurely cancel the mortgage under a heavy penalty.
More money than expected
As you will have verified, the contracting of these lines of credit will have led you to greater demands on your checking account than initially foreseen. In some cases, you can avoid them, but in most of them the interest that will be applied from your financial institution will be added. At levels that offer serious divergences, depending on the needs of users. In any case, it will be up to something more than five percentage points with respect to initial forecasts.
These are amounts that will have to be added to the amount involved in contracting the mortgages. According to the latest ones provided by the National Institute of Statistics (INE), it is shown that the average amount of mortgages registered in the property registers in December (from public deeds carried out previously) is $137.955, 5,5% higher than in the same month of 2016.
Another of the most relevant figures that confirm this trend is that the value of mortgages constituted on urban properties reaches 3.722,0 million euros, 1,9% more than in December 2016. In housing, the capital loaned reaches the 2.391,1 million, with an annual increase of 2,6%. To which must be added the expenses generated by this product. As you have seen previously and that it will reduce competitiveness to its conditions.