Purchase Process _ Spanish Mortgages

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Purchase Process _ Spanish Mortgages Powered By Docstoc


  •   The Property
                                Property Purchase & Mortgage Information
  •   Costs

  •   Spanish

  •   Glossary

a place to relax
a place to enjoy
a place to live

This information pack
has been designed to
give a generic, working
knowledge of property
purchase and mort-
gages in Spain. It is
not intended as a de-
finitive     reference
document as changes
in processes and local
regulations can be
introduced at short

                             Your guide to buying
notice. All information
in this document is
correct at the time of

                              property in Spain
                                    For all enquiries please call; (0034) 952930532
                                         Or e-mail;
                            Property Purchase & Mortgage Information                                                   Page 2

                           Property Purchase Process
                           Once clients have decided on       intent to purchase. This is          are usually 30% deposit and
                           the property they wish to pur-     usually known as ‘going to           then the remaining 70% on
                           chase a reserve deposit of         contract’. The purchase is           signing of the title deeds. The
                           between 3000€ and 6000€ is         formally concluded when the
                                                                                                   appointed lawyer will carry out
                           required immediately, to fix       title deeds are signed before
                           the price and have the prop-       the Notary Public and the bal-       all necessary searches on the
                           erty taken off the market. If      ance of the agreed purchase          property; to ensure that it is
                           the buyer changes their mind       price is paid to the vendor. At      owned by the vendor and
Our friendly staff will
be pleased to talk to      and pulls out, this deposit is     this point the buyer will re-        there is planning permission
you in English, Span-      often non-refundable. Once         ceive the keys to the property.
ish, German, Danish,       terms and conditions have          If the vendor changes their
French                     been agreed with the vendor        mind before completion they
                           and the lawyer has completed       have to return all monies paid,
                           his searches, checked for          together with compensation
                           debts and charges etc.             (usually an additional 100%)
                           (usually within 30 days) the
                           private purchase contract is       Off Plan Properties
                           drafted. This includes all terms   If clients are purchasing a new
                           and conditions of the sale and     construction, know as ‘off
                           sets out the completion date       plan’, the constructor or devel-
                           for the transfer. A deposit of
Appointing a lawyer                                           oper will ask for stage pay-
                           10 - 20% of the purchase                                                 Head Office, Riviera del Sol,
                           price may be required at this      ments to be made on the
Whilst it is not a                                            property. These can vary de-           Mijas Costa, Costa del Sol
                           stage to secure the property
necessity to have a        and as official confirmation of    pendent on the developer, but
lawyer to purchase a
property in Spain, it is
highly recommended.
They will be able to       Costs
check      out      any    When purchasing a property         If buying with a mortgage you       Plus Valia (land / capital gains
outstanding      debts     in Spain, you will normally        will also have;                     tax)
which exist on the         need to allow around 10% of                                            This is generally paid by the
property as well as                                           •        Stamp duty from 1.5%
                           the purchase price to cover                 to 2% on value of prop-    owner when they sell the prop-
help with contracts        costs such as; land registry                                           erty. Transfer tax is calculated
and NIE numbers.                                                       erty
                           fees, notary fees, legal fees      •        Notary Public from         on the increase in value of the
Clients are free to        and taxes. When purchasing                                             land from when it was last sold.
appoint a lawyer of                                                    €300 to €1.500
                           a property with a mortgage
their own or we can        however, it is advisable to        •        Land Registry from
recommend one.             allow between 11-13% as                     €300 to €1.500
                           there are fees associated          •        Banks opening com-
                           with the mortgage as well as                mission between 1% &
                           the purchase. As a general                  2% of the mortgage
                           guide you should consider the               amount
                           following:-                        •        Gestoria charge for
                           For the purchase;                           mortgage deed and
                           •       7% Tax                              property deed – this is
                           •       1% Stamp Duty                       normally in the region
                                                                       of €250
                           •       Notary Public from
                                   300€ to 1500€
                           •       Land Registry from
                                   300€ to 1500€
                           •       Legal Fees

For friendly impartial     NIE Number (Numero de Identificación de Extranjeros)
advice visit our head
office in the heart of     It is essential to have an NIE     along with 2 photos. You will        anything from 1 to 5 weeks to
the Costa del Sol.         number for any financial deal-     also need to take your original      be processed. The NIE number
                           ings clients may have in Spain.    passport. The rules are some-        can be obtained by a lawyer
                           This is a simple, but some-        times relaxed and photos are         on your behalf. This is done
                           times lengthy process which        not required. It is best to          via Power of Attorney and the
                           involves completing an appli-      check before applying. The           lawyer will charge a fee.
                           cation form. You will need 2       NIE can be obtained from a
                           photocopies of the passport        local police station. It can take
  Property Purchase & Mortgage Information                                                                                 Page 3

The Spanish Mortgage Market
Just like any advanced econ-     inflexible and expensive mort-          It is often advisable to consult
omy Spain has a developed        gages to cheaper and flexible           with a reputable mortgage
mortgage market with a num-      ones. Although the interest             broker before deciding on your
ber of lenders offering a great  charged on all Spanish mort-            choice of bank or mortgage
variety of Spanish mortgages.    gages is calculated as a func-          product. Mortgage brokers
                                 tion of the base rate set by the        have access to a wide range of
In Spain, mortgages are of- European Central Bank, be-                   lenders and products and are
fered by national banks and yond that mortgage lenders in                able to advise which is the
savings banks (known as ca- Spain are relatively free to set             most suitable for your circum-
jas) and sold either directly by the charges and terms of the            stances. Brokers will often
the lenders or through mort- mortgages they offer. This                  charge a fee for their services .
gage brokers. Several interna- translates into significant dif-
tional banks, including British ferences between Spanish                                                          *Basic documentation
banks like Barclays, Halifax mortgages in terms of their
and Lloyds TSB, offer mort- costs and conditions.                                                               required for a mortgage
gages in Spain alongside the                                                                                           application
national banks and cajas.        Not only can Spanish mort-
                                 gages vary in their attractive-                                              •       Passport for each
Just like any other developed ness from bank to bank, they
mortgage market there are big can also vary considerably
differences in the costs and within the same bank, and                                                        •       Last 3 month’s pay
terms of the Spanish mort- even from branch to branch.
gages on offer, ranging from                                                                                          slips and P60 for
                                                                                                                      employed appli-
                                                                                                              •       Lat year’s trading
Types of Mortgages in Spain                                                                                           accounts and most
As in other countries such as         mortgage or at some point in       ments will not exceed 35% of                 recent tax return
the United Kingdom the vast           the future during the lifetime     your net annual income..
majority of mortgages sold in         of the mortgage. This kind of                                                   for self-employed
Spain (to both Spaniards and          Spanish mortgage can be very     In general Spanish mortgage                    applicants
Foreigners) are variable rate         attractive for foreign investors lenders don't like to lend more
mortgages. This means that            who plan to rent out their       than 70% of the value of the           •       Last 3 months
mortgage repayments vary              Spanish property to cover the    property to foreign buyers of
                                                                                                                      personal bank
according to the base rate set        mortgage costs.                  Spanish property. Neverthe-
by the European Central Bank.                                          less this is starting to change                statements
This means if the interest rate       Recently Spanish lenders have as Spanish mortgage lenders
falls they will pay less, but if it   increased the term of mort- realise how important foreign               •       Purchase contract
rises they will pay more.             gages. Where as in the past buyers of Spanish property are
Most lenders also offer a fixed       most Spanish mortgages were and how big the market is.
rate     Spanish      mortgages.      for between 10 and 20 years                                            * The above list is intended
These Spanish mortgages               now many lenders offer mort- In the meantime a good Span-              only as a guide as further
tend to have higher interest          gages of up to 30 years or ish mortgage broker may be
payments in the short term but        even longer (depending upon able to get foreign buyers a               documentation may be re-
if interest rates rise a fixed-       the age of the borrower).        Spanish mortgage with a loan-         quired depending on the
rate Spanish mortgages holder                                          to-value of up to 80%
might end up paying less than         How do Spanish Mortgage (depending upon the circum-                    mortgage lender’s company
would be the case with a vari-        Lenders Price Their Mort- stances of the applicant). A                 policy and the mortgage
able-rate Spanish mortgage.           gages?                           good Spanish mortgage broker
Some Spanish mortgages                                                 also removes the language             product terms and condi-
lenders also offer a mixed            Spanish mortgage lenders will problem as they interface be-            tions
mortgage that involves a cer-         decide how much to lend you tween borrower and lender
tain period (for instance 5           and on what terms according and provide both sides with all
years) of fixed interest pay-         to your personal and financial the information they need in
ments, and a floating rate            profile. They will want to know their respective languages.
thereafter.                           how much you earn and what
                                      your other financial commit-
Most Spanish mortgage lend-           ments are (your personal bal-
ers now offer an interest only        ance sheet - assets and liabili-
mortgage under which borrow-          ties). As a general rule of
ers pay only the interest on          thumb they will lend according
their loan, and then return the       to earnings multiples whereby
capital either at the end of the      your Spanish mortgage repay-
Place 2 Live
C.C. Atalayas de Rivera, Local Nº 1,
Calle Viento del Sur,
Riviera del Sol,
Mijas Costa, 29649,
Phone: (+34) 952 93 05 32
Fax: (+34) 952
                                                                 Karina Karlsen
                                                         Proprietor & Managing Director
                                                                   Place 2 Live
a place to relax                          “Spain has always proved popular with Northern Europeans. In
                                          recent years more and more people have made Spain their first
a place to enjoy                          choice for holiday homes, retirement or property investment. With
                                          one of the best climates in the world, golden beaches and re-
                                          laxed lifestyle it’s easy to see why.
a place to live                           With over 20 years experience in Spanish real estate, let me help
                                          you realise your dream of buying a home in the sun.”
                                                                                           Karina Karlsen


Glossary of Terms
 Below is a list of terms you will come     Impuestos
 across on a day to day basis.              Taxes

 Abogado                                    Loan to Value (LTV)%
 Solicitor / Lawyer                         This is the percentage of the loan compared
                                            with the value of the property.
 Agencia de Inmobiliaria
 Estate Agent                               NIE number
                                            A registration document to enable a person
 Disposición de fondos                      to purchase anything in Spain i.e. a house,
 Provisión of Funds                         car, obtain finance

 Escritura de Compraventa                   Notario                                        Spain…
 Property Purchase Deed                     Notary                                         Share it with someone
 Escritura de Hipoteca                      Nota Simple
 Mortgage Deed                              Land Registry report

 Euribor                                    Offerta Vinculante
 The European Inter Bank Offered Rate       Binding Offer

 Gastos                                     Registro de la Propiedad
 Costs                                      Land Registry

 IVA                                        Tasacion
 VAT                                        Valuation