Denise Watson, Wednesday, 13 November 2013
This article is part of a series of 8 articles about buying property in Spain. The other articles in the series cover the following topics:
If you intend applying for finance in Spain to buy a Spanish property, you should treat this as a priority, as you need to be clear about the money
available, to help you know your purchasing limits. Also, the process in Spain may not be as quick as in your own country, so it’s best to get this
sorted out before anything else. Another option might be to secure a loan against your current property in your own country, so don’t forget to
consider this option.
Finding the Right Mortgage for You
If you’re applying for a mortgage in Spain, this will be calculated according to your outgoings. For example, you will be expected to pay a twenty
five per cent deposit calculated on the value of the house and then the mortgage will be calculated on the remainder. A Spanish requirement, though
not always applied, is that you spend no more than thirty five percent of your income on outgoings so, in this example, thirty five percent of a
monthly income of 2,500 euros will be eight hundred and seventy five euros. If your monthly outgoings are five hundred euros, you will be allowed a
mortgage of up to three hundred and seventy five euros per month, taking your total monthly outgoings up to that thirty five percent limit. Mortgage
repayments periods can stretch from five to twenty years, depending on whether of not you are a resident (i.e. the country where you spend more than
183 days a year) and when you will reach the age of seventy, the latter being the cut-off point for mortgage commitments. When shopping around for
the best mortgage, be sure to get a statement from each bank or mortgage lender, so that you can show this to later potential providers you may
approach. If you are not resident in Spain, you may be asked to provide an aval (i.e. a guarantor), someone who will pay what is due, should you
default on your mortgage.
Registering an Interest in a Property
If you’ve set your heart on a particular property, it may be a good idea to pay a reservation-cum-deposit fee, which will take that property off the
market in that moment and, at this early stage, it could prove to be a very sensible idea to get a lawyer or gestor (a qualified professional who
helps the general public will all paperwork needs) involved in the buying process. This fee will be a percentage which was agreed between the seller
and the estate agent before the house went on the market and will most likely fall between 5% and 15% of the house value. Your lawyer or gestor will
also set up a period of time (usually ninety days) in which you must complete all of the necessary arrangements and checks to be ready to move
on your chosen property. Your chosen lawyer might carry out this initial support free of charge and his responsibility is to make sure that, should
you decide to pull out of your earlier interest, your reservation fee will be safe. This will be done by building in any possible extenuating
circumstances that may slow down or halt the purchase process.
The Purchasing Stage
When all checks have been carried out on buying a property, and all documents have been brought together, the next step is to sign the sales contract
in the presence of a notary (notario/a), a qualified lawyer and legal representative who presides over all contractual processes. The notary’s legal
fees are usually between four and eight hundred euros and a later fee, the property registration fee, will be around the five hundred euros marker.
Please note that these two fees might vary, depending on how much work and time was spent on getting the legal process and documents ready for the
completion of sale.
So, as an example on a house valued at 200,000 euros:
||purchase tax (10% VAT rate or 10% ITP rate (explained below)
||property registration fees
If you buy a newly built property in Spain, you will pay VAT but, if you buy a second-hand property the tax paid is known as the transfer tax
(impuesto de transferencia de propriedad) and both are currently set at 10% of the purchase price.
A good estate agent will do all of these things for you, making the purchase a smooth transition. Once you own your chosen property, you have only
the yearly community tax and refuse taxes to pay. These vary from region to region and are set between 0.4% and 3% at the moment and so, as an
example of a property in a rural area, the community tax (IBI (impuestos sobre bienes immuebles)) may stand at around two hundred euros per year and
the local refuse and drainage tax (basura y alcantarillado) at one hundred euros.
Now the property is yours, any other costs incurred will relate only to you personalisation of your dream home. The limit on this will be yours to