Saving to buy a home is a fundamental step before applying for a mortgage. In Spain, you not only have to put together the initial down payment for the property, but also consider the costs associated with the loan and the purchase. In this guide we break down how much you should save and the additional costs involved in buying a home.
1. The amount of the down payment: 20% of the price of the house.
In Spain, banks usually finance up to 80% of the appraised value or purchase price of the property. This means that you will have to have 20% as down payment.
Practical example:
- Price of the property: 200.000 €.
- Required down payment (20%): €40,000.
Note: This percentage may be higher if:
- You have a high-risk financial profile.
- The home is not your usual residence.
2. Costs associated with the purchase: between 10% and 15% of the price.
In addition to the initial amount, you must take into account the costs derived from the purchase, which include:
2.1. Taxes
- VAT ( new homes):
- 10% of the price of the property.
- In the Canary Islands, the equivalent is IGIC ( 6.5%).
- Transfer Tax (ITP) ( second-hand homes):
- Between 6% and 10%, depending on the autonomous community.
2.2. Notary and registration fees
- Notary: Drafting of deeds of sale and mortgage.
- Land Registry: Registration of the deed in the official registry.
- Total cost: Between 0.5% and 1% of the price of the property.
2.3. Appraisal
- What is it?
The official valuation of the property, mandatory to apply for a mortgage.- Approximate cost: Between 300 € and 500 €.
Other administrative expenses
- Administrator: Hiring of a manager for the title deed process.
- Approximate cost: Between 200 € and 400 €.
Practical example:
- Price of the property: 200.000 €.
- Associated expenses (10-15%): Between €20,000 and €30,000.
Mortgage-related expenses
Although some mortgage costs, such as the Stamp Duty (Impuesto de Actos Jurídicos Documentados, IAJD), are assumed by the bank from 2019, other costs are borne by the customer:
3.1. Arrangement fee
- Some banks apply a commission when formalizing the mortgage.
- Approximate cost: Up to 1% of the loan amount.
- Example: In a mortgage of 160.000 €, it would be 1.600 €.
3.2. Compulsory insurance
- Home insurance:
Mandatory to protect the property.- Annual cost: Between 150 € and 400 €.
- Life insurance (optional):
Although it is not mandatory, many entities require it in order to offer better conditions.- Annual cost: Between 200 € and 600 €.
4. The total calculation of the necessary savings
To determine how much money you need to save, add it up:
- 20% down payment for the house.
- The costs associated with the purchase (10-15% of the price of the property).
- Additional costs related to the mortgage.
Practical example:
- Price of the property: 200.000 €.
- Down payment (20%): €40,000.
- Associated expenses (15%): €30,000.
- Total required: €70,000.
5. Exceptions: 90% or 100% mortgages.
In certain cases, some banks offer mortgages with financing in excess of 80%. These options are aimed at:
- Young people under 35 years of age.
- Foreclosed or bank-owned homes.
- Clients with solid financial profiles.
Note: These mortgages usually involve:
- Higher interest rates.
- Stricter conditions.
6. Tips to achieve the necessary savings
- Define a clear objective:
Calculate how much you need to save based on the price of the home you want. - Create a budget:
Reduce unnecessary expenses and set aside a fixed portion of your income for savings. - Open a specific account:
Use a separate account for your housing fund. - Take advantage of tax incentives:
Some autonomous communities offer deductions for first-time homebuyers. - Simulate different scenarios:
Use online tools, such as mortgage calculators, to plan your goals.
Conclusion: Plan your savings to ensure success
Saving for a mortgage in Spain requires detailed financial planning. In general, you will need between 30% and 35% of the house price to cover the down payment and associated costs. With a well-defined savings strategy and a realistic assessment of your financial capabilities, you will be able to achieve this goal and take the step towards buying your home.
