Financial Dictionary - Retainer
A retainer is the money that we advance to the bank so that once it has pre-awarded the mortgage, it can carry out the procedures and finance the initial expenses of the property purchase and also those incurred on signing the loan.
Thus, the customer deposits this amount in their account and the bank holds it. As this is nothing more than an estimate made by the entity and it is quite common that once these procedures have been carried out, there is leftover money. In that case, the bank will settle the amounts with us and deposit the surplus in our account.
What does the retainer include?
As we stated, the retainer covers the expenses of the deeds of sale and the mortgage: the property appraisal, administrative services agency and notary fees, VAT on a new home or property transfer tax in the case of second-hand homes, Property Registry fees, mortgage arrangement fees and stamp duties.
Of all these expenses, undoubtedly the most significant are those relating to taxes, especially property transfer tax and stamp duties.
How much money is placed into the retainer?
Although the final amount will vary depending on each bank, notary, administrative services agency and appraisal company, and also on the autonomous community in which the procedures and purchase are carried out, this amount normally accounts for between 10% and 12% of the total price of the home. In addition, we must receive it before signing the mortgage that will represent at least 20% of this loan.
That is, when buying a property with a mortgage, we must have at least 30% of the purchase amount.
And what happens after the Mortgage Law?
With the entry into force of the Mortgage Law, expenses would be distributed as follows: now it is the bank that pays the notary, registry and administrative services agency expenses and the stamp duties; and the customer only has to pay the property appraisal so the retainer is a lot lower.