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BUYER’S GUIDE

 

Buying a property in Spain

Buying a property in Spain is relatively straightforward and will pose no problem as long as the correct steps are followed. Sol Estates Investments offers one of the largest property portfolios in the Costa del Sol, and our property professionals will happily guide you through the purchase process. If you do not already have a lawyer, we have a selection of professional lawyers that we have worked with over the last decade, it is recommended that you engage one to safeguard your interests throughout the purchase. Our lawyer list include multiple language options.

The following is an approximate guide to the purchase process, although this may differ from time to time depending on the particular operation.

Reservation of your property

Once you have decided on a property you want to buy, it is normal procedure in Spain to place a reservation deposit. This can be anything from 6.000 euros up to 10% of purchase price, this deposit is accompanied by a reservation contract which states the names and identification numbers of the buyer and seller, the agreed sale price and any conditions that have been agreed concerning the purchase. The reservation deposit is normally paid to the estate agent to show good faith. It is recommended to never pay a reservation deposit directly to the owner.

Property Check

At this point your lawyer will begin carrying out the necessary checks on the property with the local land registry to ensure that all the property’s documents are in correct order, that there are no embargos or debts on the property and that the person selling the property is actually the owner. Many developers and real estate agencies are offering properties in the Costa Del Sol with attractive discounts and incentives. Now more and more people are returning to the Costa Del Sol , and these great promotions and new low cost pricing only emphasise what a fabulous place it is to buy again.

Private Contract

Once the lawyer is satisfied that everything is in correct order then the buyer and seller will sign a private purchase contract (a compraventa) and the buyer will pay a 10% deposit (less the original reservation deposit). In this contract, the buyer and seller details and personal details are recorded, along with the agreed sale price and the date for the final transfer of the property from seller to buyer. At this stage, if the buyer decides to withdraw from the purchase they will forfeit their deposit and if the seller withdraws they will be obliged to repay double the deposit amount to the buyer, unless otherwise agreed.

Title Deed

The final stage is when you pay the remainder of the monies due and the Title Deed (Escritura) is signed in front of a public Notary. After the deed has been signed  your lawyer will register the property in the buyer’s name at the local land registry.

Purchase Costs

Buyers should be aware that there are significant purchase costs involved when buying a property in Spain, which will amount to approximately 12.75% of the purchase price. This is comprised of the following:

Buyers should be aware that there are significant purchase costs involved when buying a property in Spain, which will amount to approximately 12.75% of the purchase price. This is comprised of the following:

          *  8% Transfer Tax (impuesto de transmisiones patrimoniales) or VAT if it is a new building

          *  1% Legal Fees (approximation, depending on the lawyer)

          *  0.5% Notary Fees

          *  0.5% Land Registry fees

          *  2,75% Mortgage cost

The above are the costs relevant to purchase a property from an individual. If  a property is purchased from a developer, the Transfer Tax (8%) is replaced by VAT, which is currently 10% on property.

Other paperwork required for purchasing a property!

Spanish nationals need only their identification (for all persons whose name is going to appear on the Title Deed).

If you are a non-resident the Spanish Ministry of Interior requires you to obtain a certificate of non-residency, which in turn determines your fiscal number, so that you can sign the title deed. It will also be required later in order to pay taxes. This document is known as an NIE number and can either be obtained in person at the local police station or can be obtained via your lawyer for a small charge.

Recommendations!

We recommend open a bank account when commencing a property purchase as this will be needed not only for the purchase, but also to set up direct debits for the utility charges such as electricity and water.

It is also recommended to write a Spanish will. This only has to relate to assets situated within Spain and need not concern assets owned in your country of residence. This will simplify the probate process in the unfortunate event of the death of the property owner and significantly reduce costs and the duration of the process.

Mortgage Purchases!

If you are looking to buy property in Spain, Property Genie has forged strong links with most of the leading banks in Spain, we also work closely with the best advisors that can ensure your needs are met and your interests put first. In most instances we can arrange a Spanish mortgage for the majority of home buyers. Below is a detailed breakdown of this process and if you complete the brief details on the page, we will contact you at your earliest convenience.

Who can have a Spanish Mortgage?

Most nationalities can be considered for a Spanish mortgage. The Bank needs to be able to verify your identity, income, taxes paid and credit history. As long as this is possible, the Bank should be able to offer you a mortgage.

What documentation do I need to provide to the bank?

Employed

          *  Copy of passport(s)

          *  Last 3 months bank statements

          *  Last 3 salary slips

          *  Last annual income statement from employer

          *  Last annual tax declaration

          *  Credit reference report

Self-Employed

          *  Copy of passport(s)

          *  Last 3 months bank statements

          *  Accountant letter confirming income for the last 2 years

          *  Last annual income statement from accountant

          *  Last annual tax declaration

          *  Credit reference report

How do Spanish Mortgage work?

Spanish Mortgages are almost always tracker mortgages. They track the Euribor base rate with a fixed margin above, for the life of the mortgage.

Euribor Base rates are typically based on the 12-month Euribor rate but some Banks can offer mortgages based on the 1 month and 3-month Euribor base rate.

Do I need insurance?

Most Spanish Banks will insist that you take home and life insurance with them. Without taking these insurances, most Banks will increase the mortgage interest rate or, in some cases, even refuse the mortgage.

What about repayment penalties?

The maximum early repayment penalties allowed in Spain is 0.50% during the first 5 years for full early repayment of the mortgage. This penalty must reduce to 0.25% thereafter. Partial payments are usually free.

How much can I borrow?

The amount is limited to a maximum of 100% (subject to status) of the lower of purchase price or valuation of the property you want to buy. Spanish Banks use a debt to income ratio to calculate affordability. They do this by taking your net monthly income (after tax) and then calculating what amount of this income is used to pay existing mortgages, loans and credit cards (expressed as a percentage).

Our in-house mortgage advisors have an intricate knowledge of this system and can easily pre-approve you free of charge from the first meeting we have.