The formula
costs = price × (tax + stamp duty) + notary + registry + agency + valuation · savings = down payment + costs
Where it comes from
The price of a home is not what it costs to buy it. On top go a tax on the price — a transfer tax for a second-hand home, VAT plus stamp duty for a new one in many countries —, the deed at the notary or the conveyancer, the entry in the land registry, the agency that handles the paperwork and, with a mortgage, the valuation. Together they usually come to 8 to 15 % of the price, and the bank does not lend that money: it comes out of savings, together with the down payment. That is why the figure that matters is not the price but what you need on completion day, which is the down payment plus the costs.
How to work it out by hand
- Multiply the price by the tax rate: it is the largest item
- If the home is new, add the stamp duty percentage as well
- Add notary, registry, agency and valuation
- Work out the down payment as a percentage of the price and add the costs: that is the saving you need
What is worth knowing
The tax is what changes from place to place and what weighs most. In Spain the transfer tax on a second-hand home runs from 6 to 11 % depending on the region, with reduced rates by age, large family or disability, and a new home pays 10 % VAT plus a regional stamp duty of 0.5 to 1.5 %. In the United Kingdom it is stamp duty land tax in bands; in the United States, closing costs vary by state and typically run 2 to 5 % of the price, with the tax often charged to the seller. Notary and registry fees follow official scales in bands by price, so a dearer home costs more but proportionally less. And where the law makes the bank pay the mortgage costs, as in Spain since 2019, what is added here are the purchase costs, which stay with the buyer.