There are many factors to consider when we calculate the cost of a mortgage. In addition to the standard notary, appraisal, registration and tax expenses, we also need to consider the fees the bank charges.
Spain's new mortgage law changed the fees charged for arranging, repayment, subrogation and novation. Some charges were removed and others were reduced.
This is the only fee customers should pay when arranging a mortgage loan with a bank. Before the introduction of this law, banks also charged study and administration fees for analysing whether the transaction was viable based on customer's creditworthiness.
Study and management fees
These are the fees banks charged for checking and analysing whether a transaction was viable, based on the creditworthiness of the person applying for the mortgage.
Arrangement expenses fee
This is a percentage that banks charged customers for arranging loans that was paid when the loans was granted.
Under the current mortgage law, there is no limit on fees, but they must all be included in a single arrangement fee, including all study, management and arrangement costs.
Early repayment fee
Some or all of the debt is often repaid before the end of the agreed repayment period. This saves on interest payments, but is subject to a fee. This fee was reduced considerably under the 2019 Mortgage Act. The repayment fee is intended to compensate the bank for the interest it ceases to earn.
In the case of variable-rate mortgages, the early-repayment fee varies depending on when the debt is repaid. If this repayment occurs during the first three years of the mortgage, the fee may be up to 0.25% of the debt. If it occurs in the first five years, the fee drops to 0.15% of the principal repaid.
The fee is different for fixed-rate mortgages. If the repayment occurs during the first ten years, the maximum fee is 2% of the amount repaid, falling to a maximum of 1.5% after the first ten years.