Mortgage expenses: who pays what under Law 5/2019

The context of Law 5/2019 and consumer protection

Law 5/2019 transposed Directive 2014/17/EU on credit agreements for consumers relating to residential immovable property into Spanish law. Its main objective was to increase transparency in the credit market, balance the positions between banks and customers, and put an end to litigation arising from unfair clauses.

Prior to this reform, the buyer had to bear the full cost of notary fees, land registry fees, administrative processing and Stamp Duty on Legal Documents (IAJD). Following various rulings by the Supreme Court and the Court of Justice of the European Union (CJEU), the legislature established that the financial institution, as the main beneficiary of the correct creation and registration of the mortgage security, had to assume the majority of these costs.

Detailed breakdown: who pays which item of mortgage expenses

The regulation strictly distinguishes between items payable by the lender (the bank) and those payable by the borrower (the buyer applying for the loan). Below is a detailed breakdown of each expense involved in establishing real estate credit.

Expenses covered by the bank

The law explicitly provides that the bank must pay the following costs arising from the preparation and execution of the loan:

• Notary fees for the mortgage deed: The fees corresponding to drafting and executing the public deed for the mortgage loan are borne entirely by the financial institution.
• Land Registry fees: Registering the mortgage in the Land Registry is the procedure that provides legal validity to the bank's real security interest. The fee invoice issued by the registrar for this purpose is paid by the institution.
• Administrative agency (gestoría) fees: The administrative processing of the mortgage deed, including collecting the notary document, paying taxes, and submitting it to the registry, must be paid by the bank when the agency is appointed by the institution itself.
• Stamp Duty on Legal Documents (IAJD): Under the notary documents category for mortgage loan deeds, the taxpayer liable for the tax is the bank, in accordance with the amendment to the recast text of the Property Transfer Tax and Stamp Duty Act.

Expenses payable by the buying client

For its part, the law assigns a limited number of items to the borrower, related to prior property verification and obtaining personal documentation:

• Property valuation: The official property valuation is essential to determine the auction value and the maximum loan-to-value percentage the institution will grant. The cost of the valuation is payable by the client. However, the buyer retains the right to provide a valid valuation carried out by any valuation firm approved by Banco de España, which the bank cannot reject if it remains valid.
• Copies of the deed requested by the buyer: While the master copy and copies required by the bank are paid for by the institution, simple or official copies of the mortgage deed specifically requested by the client will be at their own expense.

Key difference between mortgage expenses and property purchase expenses

There is often confusion between expenses derived from financing and expenses inherent to the property purchase contract. It is crucial to highlight that Law 5/2019 exclusively regulates who pays mortgage expenses within the context of the loan, without altering the general rules governing property transfer transactions.

When purchasing property, separate financial items and taxes arise that are payable by the buyer:

1. Acquisition taxes: If the property is new-build, the buyer pays Value Added Tax (VAT / IVA) alongside the IAJD associated with the purchase. If the property is pre-owned or second-hand, the buyer pays Property Transfer Tax (ITP), whose tax rates are regulated by each autonomous community (as in Comunidad de Madrid, where the general rate of 6% applies).
2. Notary and registry fees for the purchase: Notary and registry fees corresponding to the change of ownership of the property in the purchase deed continue to be paid by the buyer, in line with standard practice in Spanish real estate transactions.
3. Administrative agency (gestoría) for the purchase: Costs arising from processing the property transfer deed are borne by the purchaser.

The preliminary transparency deed before a notary

One of the main innovations introduced by Law 5/2019 to ensure informed client consent is the prior online procedure before a notary. Before the formal signing of the mortgage deed, the law requires a minimum reflection period of ten days from when the bank uploads the documentation to the notary platform.

During this period, the client must attend the notary's office of their choice to receive free legal advice from the notary. In this session, the notary drafts a transparency deed (acta de transparencia) verifying that key documents have been provided, such as the European Standardised Information Sheet (FEIN), the Standardised Warnings Sheet (FIAE) and repayment simulations.

During this meeting, a detailed review is conducted of which expenses are borne by each party, the applicable interest rate, floor clauses (expressly prohibited by the LCCI) and any contractual fees.

Arrangement fee and other associated financial costs

Apart from notary, administrative agency, registry and valuation expenses, mortgage credit transactions can include costs of a strictly financial nature. Prominent among these is the arrangement fee (comisión de apertura), an amount that banks may charge the client upon granting the loan.

For an arrangement fee to be valid, regulations and case law require that it covers all assessment, processing and granting expenses of the mortgage, and that its amount has been adequately disclosed in the FEIN. Furthermore, the courts hold that this fee must correspond to services actually rendered or real costs incurred by the institution.

Reclaiming expenses on loans executed prior to 2019

For individuals who took out a mortgage contract prior to the entry into force of Law 5/2019, case law from the Supreme Court and the CJEU establishes the right to request a refund of amounts unduly charged under clauses deemed null and void due to being unfair.

The amounts subject to reimbursement for mortgages prior to June 2019 comprise:

• 100% of the administrative agency (gestoría) fee.
• 100% of the property valuation fee.
• 100% of the Land Registry registration fees.
• 50% of the notary fees for the loan deed.

IAJD paid on loans prior to November 2018 is not subject to reimbursement by the financial institution, in line with the criteria established by the Administrative Litigation Chamber of the Supreme Court.

Specialised advice in credit intermediation

The complexity of financial and real estate regulation makes professional technical guidance advisable when analysing bank offers, negotiating financing terms and structuring a property purchase. Analytically assessing the true impact of the Annual Percentage Rate of Charge (APRC / TAE), required cross-selling products and the correct allocation of expenses avoids unnecessary costs throughout the lifespan of the loan.

At Sky Real Estate, we have a team specialised in the regulatory framework for mortgage credit, supported by industry recognitions such as those received at the Sky Law European Legal Awards between 2023 and 2025 in the legal and regulatory advice category.

We operate in strict compliance with current legislation as an entity registered in Banco de España's Register of Real Estate Credit Intermediaries under code D-286. This official accreditation guarantees maximum transparency, professionalism and neutrality in managing financing solutions tailored to each buyer's financial capacity.

If you require technical advice when searching for your loan or wish to resolve specific queries regarding the cost structure of your transaction, you can visit our real estate credit intermediaries section.