Mar 28, 2026
3 min read
Overvaluing the house as a safe asset and miscalculating all costs can lead to low or even zero income.
Buy a house for 300,000 euros and pay 500,000: The real cost of buying a house
Overestimating housing as a safe asset and miscalculating all the costs can lead to low or even zero returns.
Spain is experiencing a housing crisis that is making it difficult for many young people in particular to access property ownership.The lack of new construction, together with the appetite of investment funds and individuals to buy houses and apartments for work, has led to fewer and cheaper houses.
It often happens that people who want to buy a house take out a mortgage loan.Financing, which in most cases requires a payment of EUR 200,000, EUR 300,000 or even more, allows access to the property, but also means taking on a large financial burden for decades that must be repaid to the bank.
To show the numbers, buying a house of 300,000 euros in a big city, financed with a 30-year loan of 240,000 euros at a fixed rate of 2.9% - the average price according to the latest data from INE - means a payment of only 120,000 euros.That is, the buyer pays effectively half of the additional amount.But it is not an additional cost that should be considered.
Taxes and related charges must be included in the purchase, which are paid immediately.For a house with that amount, property transfer tax (or VAT on new construction), along with notary, registration and valuation, increases the bill by an additional 10% or 12%.It is between 30,000 and 36,000 euros.With these considerations-price, taxes and interest-the total cost of buying that house is 450,000 euros.
This is where other costs come in.IBI can be between €400 and €600 a year in a city like Madrid, which equates to around €15,000 over 30 years.Mortgage-related insurance such as home and life insurance can add another €15,000 over the same period.Community spending of around €80 per month adds up to €28,800 over 30 years.If you include all these factors, the approximate total price of a 300,000 euro apartment can easily reach 500,000 euro in three decades.All this without the possible renovation and purchase of furniture and machines, if the house is not included, or if you want to give it a picture.It also does not include maintenance costs.
According to Jordi Sanchez, online sales manager at GoHipoteca, one of the most common mistakes first-time buyers make is to focus on the interest rate when the main obstacle is another."The problem is not optimizing the mortgage, but access to it," he emphasizes.In practice, most buyers are conditioned by two factors: previous savings and banks' risk criteria.
To buy the house shown in the example, the buyer needs to deposit at least 90,000 to 100,000 in advance, which is equivalent to 20% of what the bank will not lend, plus transaction costs.This barrier keeps a large number of people away.Another common mistake is to only calculate the monthly payment when you already have enough money to get a mortgage.Because the real financial burden is much broader."That's right. The analysis is not about how much you can afford each month, but how much you can afford without compromising your financial stability," Sanchez explains.
As mentioned above, IBI, public charges, maintenance, consumables and insurance are added to the mortgage payment.Together, these costs can significantly alter a household's ability to pay.For this reason, although banks usually set as a reference that the fee will not exceed between 30% and 35% of income, experts recommend that you go further and ensure savings between 20% and 25% of income, which will allow you to absorb unforeseen events without jeopardizing financial stability.
"The first step before looking for a home is to know your creditworthiness. It's not about paying for the mortgage today, but about doing so over time without compromising financial stability. before deciding to buy," said Laura Martinez, spokeswoman for iAhorro
An investment that is not always safe
In many cases, the problem is exacerbated when the idea behind buying a house is to invest in it to rent it. This partly explains the upward pressure on rental prices in many cities. For a profit of about 5% per annum, the owner who bought an apartment for example for €300,000 needs to set a rent of about €1,300 per month. This does not take into account other fees or taxes, which can reduce the final profitability.
At this 1,300 euros per month, it would take the owner about 27 years to recover the property and mortgage interest, considering that the property remains rented throughout the period.If all insurance, taxes, maintenance and renovation costs are taken into account, it will take between 30 and 35 years to cover all costs.
Common mistakes are underestimating the inspection, underestimating deadlines, or ignoring actual costs.As a result, low or bad profits."Compared to other assets, such as a similar index in the world, there is a high concentration of buildings, low water and high prices. Real income can be improved and many poorly planned projects that do not make a profit or are not good. Norz Patrimonia.
The impact of the total cost will affect those who are thinking of reselling their home in the short or medium term. A person who buys a house for 300,000 euros and sells it for 350,000 euros a few years later may think that he has made 50,000 euros along the way, but of course he will not only get any benefits, but he will lose money.
A buyer who buys a house for 300,000 euros pays the first 90,000 euros (between the down payment and expenses).If you sell the house after five years, you have already paid around 60,000 euros in mortgage payments.Of that amount, about 33,000 euros are interest and about 27,000 euros in capital calculation.Added to this approx.13,000-15,000 euros ongoing costs (IBI, insurance, public and maintenance).In total, the actual costs assumed at that time exceed 135,000 euros.
At the time of sale, in addition, there would be around €210,000 and €215,000 in mortgages to pay back to the bank, plus possible exit costs: agency fees, municipal capital gains and, as the case may be, income tax on the proceeds.The bank may also apply a mortgage prepayment tax - which can be as high as 2% in the early years in the case of a fixed-rate mortgage.
With all this, the owner has to sell the house for about 380,000 euros just to not lose money.That's a 25% revalue in just five years.If the goal is to get a net profit of about 30,000 euros, the sales price should be higher than 410,000 euros, which means an increase of more than 35%.In annual terms, this requires constant growth of around 5 to 7%, a scenario that, as experts warn, does not always come true.
Although historically the trend of housing prices in Spain has been upward and inflationary, there have also been periods when real estate prices have fallen."The great tradition of buying a home in Spanish culture makes it highly valued compared to other options. Also, the expectation or mistaken belief that housing always goes up seems like a very safe investment," says North Patrimonia Consultants.
In this context, comparisons with other investment options help measure opportunity cost.A buyer who spends 90,000 euros on a house down payment and expenses and manages to sell after five years for a net profit of about 30,000 euros earns a return of about 33 percent, equivalent to about 6.6 percent annually.The same capital invested in a fund invested in an index such as the S&P 500, which brings together the 500 largest companies in the United States - with an average historical profit of between 7% and 10% per year - would have generated a profit of 36,000 to 50,000 euros over the same period.That is, between 40% and 60% gross profit.Of course, investing in the market is also subject to risk, statistics are historical data and not guaranteed.
Experts explain that this does not mean that houses are a bad investment, but they ask one of the most profound ideas in the Spanish concept: that buying a house is always the most profitable way.In an environment of high prices, rising costs and growing demands for housing access and financing, understanding the true costs (and opportunity costs) is key.Because apart from the emotional or important part, buying a house is one of life's most important financial decisions, and it's not always the most profitable.
