Mortgage commissions, how many are there, and how are they applied.

When financial institutions grant us mortgage loans, they charge us a series of commissions reflected in the mortgage deed and in the contract that we sign with the bank. Knowing them in advance will give us a particular advantage when negotiating.

Apart from the interest rate that the financial institution applies to the mortgage, another series of additional costs should be taken into account. We are talking about mortgage commissions, which can make it more expensive to sign the loan or other operations that we want to do during its life, such as repaying capital in advance or changing banks.

Why is it important to know the commissions?

In a mortgage market such as the current one, where spreads are around 1%, with interest rates at deficient levels, it is clear that mortgage conditions can make a big difference between an attractive and exciting product for personal finances or, for what it is not so much.

It is essential that, as users, we not only have prior knowledge of the commissions that can be attributed to a mortgage , but also, of course, when making a comparison between the possible mortgages that may interest us, we must always calculate what commissions as accurately as possible.

The battle for commissions is one of the added elements within that small reactivation in granting mortgages in the last year , since financial entities seek to make their prices appear more by retouching commissions above even other concepts. , which makes consulting these possible mortgage commissions even more basic for us as users.

Can mortgage commissions be negotiated?

This is a very common question and also very justified if we take into account that many financial products allow negotiation on their particular conditions. However, the best mortgages on the market do not allow large negotiation margins; they are products that, as we will see later, are very sacred in terms of conditions and characteristics, and with their very tight commission costs.

It may be that in other types of mortgages this is simpler, in those open mortgages or configure them where the particular conditions of the product are negotiable, however, this is not the usual pattern today, so the commissions that are offered within of the product catalog will be the ones that will be applied to your mortgage in the vast majority of cases.

How are the new mortgages

Basically, in the last two years, we can talk about a new mortgage model , really a mortgage that we already knew, based on the connection with the user, but still emphasizing the concepts of connection.

These mortgages tend to offer lower spreads than the average , apply repayment terms of no more than 25 or 30 years, for financing that will hardly reach more than 70% of the appraised value, in some cases up to 80%. It is relatively common for some commissions to either not be applied or to be reduced, the commissions with the greatest incidence in this type of restriction are the study and opening commissions , although this does not mean, much less, that we will not find them in a good number of mortgages.

These are the most common commissions on mortgages:

study commission

The percentage that entities charge us for procedures and analysis must be carried out to verify the client’s solvency and the terms of the requested operation. It is generally a percentage of the requested amount. It is becoming more and more obsolete, but remember that if they do not grant you the loan, they should not charge you this commission .

Opening commission

It is charged for the procedures that the entity must carry out and that are linked to the formalization and disposition of the money for the applicant . According to the Bank of Spain, it is usually a percentage of the amount that is lent and is usually paid at once, when the operation is signed.

Due to modification of conditions or change of guarantees

It is what is known as novation of the mortgage. During the life of the mortgage, the client is likely to request modifications to the loan (both parties must agree). The credit institution charges for the procedures that must be carried out in the modification of the content of the contract and/or for the analysis of risks that these modifications may entail.

Due to early partial amortization

It refers to a percentage that the entity charges for the administrative procedures corresponding to the actions that it must carry out and the compensation for what it stops earning, or loss of profit, by not receiving interest on the capital that is amortized in advance.

Compensation for withdrawal and compensation for interest rate risk

If it is a mortgage loan or credit formalized as of December 9, 2007, the mortgage falls on a home and the borrower is a natural person , the entities may only collect, by partial early repayment, and if they had so agreed , an amount as compensation for withdrawal and, in certain cases, another as compensation for interest rate risk.

Interest rate compensation

The Bank of Spain is very clear in this regard, since in variable-rate mortgages , whose review occurs every twelve months or less, the entity will not be able to receive anything for this concept. On the other hand, in the case of other cases, the amount will be the agreed amount, although its collection will only be possible if the cancellation supposes a loss for the entity.

For cancellation or total early amortization

As in the cancellation or partial amortization, it refers to the administrative procedures corresponding to the actions that must be carried out, as well as the compensation to the entity for what it stops earning -or loss of profit- when it stops receiving interest on the outstanding principal of the loan. The Bank of Spain contemplates that in the case of variable interest mortgages, this commission is limited to 1%, when the loan repayment is not a consequence of the client having agreed a subrogation with another entity.