Buying Property in Spain
A comprehensive practical guide to buying a property in Spain
8. Mortgage Finance
The main sources of mortgage finance available to
non-Spanish residents for the purchase of a property in
Spain are banks. There is little difference between the
terms and conditions offered by Spanish banks.Most
of them will offer long-term loans (e.g.20 –25 years)at
commercially competitive interest rates.
The amount you can borrow depends on your income and
the value of the property you propose to buy.The bank will
assess your ability to meet the mortgage
payments based on your current
income and expenditure .Confirmation
of your income will be required,taking
into account your income tax returns
and salary slips or,in the case of those
who are self-employed,the last set of
accounts will normally be required. A
decision in principle to lend is normally
always subject to a satisfactory property
valuation report.If the report is in order,
the lender may lend up to 60 -70%of
the valuation to non-Spanish resident
buyers.
The standard types of mortgage in Spain are:
Fixed rate mortgage.-Here the rate is guaranteed to stay
fixed for a specified period.
The standard variable rate.-This is the most common
type of mortgage interest rate in Spain,which fluctuates
from time to time depending on the base rate applicable,
normally Euribor.
The following costs will be incurred when setting up
a mortgage:
The standard types of mortgage in Spain are:
Fixed rate mortgage.-Here the rate is guaranteed to stay
fixed for a specified period.
The standard variable rate.-This is the most common
type of mortgage interest rate in Spain,which fluctuates
from time to time depending on the base rate applicable,
normally Euribor.
The following costs will be incurred when setting up
a mortgage:
• Valuation fee for carrying out a valuation survey to of the
property.
• Generally an estimate of the fee would be
300 euros.
• Bank arrangement fee,normally 1%of the money
borrowed.
• Stamp Duty at the rate of 1%of the total amount,which
includes
• outstanding sums,arrears,interest,and your
lender 's legal fees
• and costs.
• Notary fee.
• Land Registry fee.
• Building insurance policy. Requested by the lender in
order to protect
• the lender and
yourself in the event of damage to
the property.
• Life insurance policy. Requested
by the lender.
In most cases,there is a cash penalty
if you pay off the mortgage before the
expiry of the fixed period.Most banks
charge 1%of the money paid.
The mortgage deed is the public
document executed by the mortgagor
and mortgagee before the Notary
Public.The deed is produced to the
Land Registry to enable them to register
the charge against the property.
Before entering into any financial arrangements,clients
should seek advice on the sources of mortgage finance
and types of loan available in Spain,as well as any legal
and cost implications.
8. Conclusion
Buying a property in Spain can be as safe as buying a property
in your own country providing the necessary precautions are
taken. Sound legal advice will offer you not just peace of mind
in dealing with your transaction but will also guide you along
the most convenient way to purchase the property in relation
to ownership,taxation,inheritance and investment issues.
| Property locations | Quicklinks | |
Mijas costa
Marbella
