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Yippee ... You’ve found that special property! what’s next ...
The steps to buying a property in Spain
PAYMENTS & FUNDING THE PURCHASE
Deposits - For new properties under construction the payment terms are made in stage payments with usually a 30 or 40% payment required after 30 days of the contract signing, with the balance on completion. There are a few builders which still have a stagger style payment structure a good example of this payment structure is a 3,000€ deposit, 30% 30 days later, 30% on wall construction, 30% on roof with the balance on completion.
Purchase Costs - For all property and land you will pay a 7% of the purchase price, which is a property tax that goes to the Spanish Treasury. In addition you will have Notary fees and land/property registration fee, which varies according to the purchase price of the property. You can choose your own Notary.
The costs of a mortgage - Normally, based on their valuation on the property, Spanish banks will lend between 60% and 70% to non-residents and 70% and 90% to residents. Banks will send a valuer to assess the value of the property, the cost of this is included in the charges made by the bank for the mortgage application, which varies according to the purchase price of the property allow about 1% but banks vary in their charges and can often be negotiated. Once you have applied for the mortgage you will need funds to cover the cost of the bank charges.
Qualifying for a mortgage - Sufficient income to service your mortgage, Life assurance to cover the terms of your mortgage ... banks will insist upon this, Working out your price range
If you need a mortgage to fund your property, you should establish what price range you should be looking at and whether you have enough cash funds for the deposit and legal fees and that your income is sufficient to afford the monthly cost of your Spanish mortgage.
You should now be seeking professional advice, about the basic lending criteria and the various options and mortgage products available to you.
A few options
Go direct to the Spanish banks and mortgage providers - the majority have English speaking staff, others do not - which may cause you difficulties. They all have their own lending criteria - how much they will lend you, the term of the mortgage, what mortgage products they offer and how much they will charge for their arrangement fees.
Use the services of an established mortgage broker, who will advise you about how much you can borrow and the mortgage products which will best suit your circumstances. Your mortgage broker may save you some time and will know which lenders to approach on your behalf, whether it's dependent on the amount of deposit you have available or whether certain conditions should be taken into consideration, and will provide you with quotations from the lenders who are most suitable for you. Throughout the mortgage procedure your mortgage broker will liaise between you and the lender - very useful if your language skills are not that good. Mortgage brokers who are registered in Spain receive their commission directly from the lender and generally do not charge you a fee - but you should check - it is not always the case.
We offer a mortgage service in Spain with a professional legal advisor and will offer a service similar to that of a mortgage broker.
What’s needed to apply for a Spanish Mortgage - Banks will ask for pay slips if you are an employee or one or two years accounts if you are self-employed and a tax declaration on both cases from your country of tax residence (P60), also copies of your passports are required and sometimes passport photographs are needed with the application ... It is fairly easy to arrange a mortgage in Spain, most banks will give you a decision in principle when you meet them, or we can arrange this on your behalf though our legal advisor.
Life assurance
It is a requirement that all mortgages in Spain are covered by life assurance. Many of the Spanish lenders insist that you use their policies and that it covers all the terms of your mortgage. Some lenders have different policies and insist that full disability cover is included as well as life cover.
When your file has been thoroughly checked and approved by an underwriter, the lender will request a valuation of the property. The valuation is not a survey. It is merely a valuation agreeing that what you are paying for the property and the amount the lender is prepared to lend is acceptable.
Should you be declined mortgage funds, either because of financial information, medical underwriting or the unsuitability of the property, the lender will advise you and issue you with a letter which you can use as your proof to have your deposit refunded to you as agreed in the Option de Compra let out clause.
Subject to everything about your mortgage application being acceptable, a mortgage offer (hipoteca) will be issued to you.
Some lenders will want their arrangement fee paid on acceptance of their mortgage offer and your life assurance policy will by put on risk from the date you signed the mortgage offer.
When the lender sends you the mortgage offer they also inform us in Spain of the details of the mortgage.
A Completion date should be concluded within 3 months of receipt of your acceptance to the mortgage offer.
Completion day
You can now arrange a time and date for completion to take place. It is your responsibility to instruct the Notary to request the mortgage funds from the lender. Your legal representative can do this for you on your behalf.
Once you know the date you will be completing on your property purchase you will need to make sure that your Spanish bank account is open and funds are being transferred into it in time for the completion date and arrange for buildings insurance to be on risk from the date of completion. You will need to provide details of the insurance policy.
If you think you may be unable to attend the meeting to sign the Escritura (final deed of sale) you can give a trusted person or friend a power of attorney (a poder) which authorises them to act on your behalf if you unable to attend the actual signing. We suggest that you instruct your lawyer to do this.
The Escritura is signed by you (the buyer), the vendor and one Notary.
Once the Escritura has been signed and witnessed you will be requested to pay all the taxes, land registry fees and mortgage fees (if applicable).
A few months later you will receive a certificate informing you that the title has been registered. The original title deed is returned to the Notary and you can collect the deeds and the Notary is able to make authorised copies
We hope this information is helpful to you ... Before we leave you to search for that dream property follow the simple steps below.
Think carefully about the location and type of the property depending on whether you plan for it to be your main residence, second home, holiday home to be let out on occasion or a property to be let as an investment for the future.
Make a list of the important elements - the purchase price, the overall size and number of rooms, is a sotanos (cellar) or garage essential, would you prefer a garden, terrace or balcony, perhaps a top floor apartment with roof solarium etc ... Having a good idea of the style and size of property before viewing is important, always have an open mind ... what’s nice in a picture is not always the case when you view them in Spain!
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