Buyers Guide

The Buying Process

Once a price has been agreed with the vendor both parties are best advised to sign a preliminary contract, a Contrato privado de compraventa. Even before signing this contract proof that the seller owns the property and that it is free of charges should be required. In Spain debts are charged to the property and any outstanding mortgage will be passed on to the buyer. A Nota Simple will confirm this. A deposit of 10% of the purchase price is usually requested and the estate agent will hold these funds in a bonded client account. If you intend to raise finance for the purchase this sales agreement should have an arres agreement (i.e. a 10% deposit) and a date specified for completion. It is possible to sign the sales contract without such a deposit and technically you are permitted to sue a vendor who subsequently withdraws but with an arres agreement in place, should the vendor decide to withdraw you are entitled to twice his deposit as compensation. The balance of the purchase price and all fees will be payable when the vendor & purchaser sign the Escritura de compraventa, the definitive contract equivalent to the Deeds of the property. If you are buying a new property you do not own the property until the work is completed and you are in receipt of the relevant certificates.

The notary in Spain is a public official who will be required to witness the deed of sale but expert, independent legal advice should be taken to protect your own interests.

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Spanish Mortgages and how they work
All mortgages are full status and proof of income and outgoings will be required. Spanish mortgages can be arranged for acquisition, renovation & construction. Due to the nature of financing new properties a "letter of intent" is issued by lenders rather than a mortgage offer until the property is completed. Re-mortgages are available through specialist lenders.

A minimum deposit of 25% of the purchase price is required and you will also be liable for solicitor's fees.

Euro & Sterling mortgages are available on a Repayment or Endowment basis. The minimum loan amount is EUR75,000 or £50,000 and can be over a 5-25 year term. All mortgages should be fully repaid by the age of 70 and life cover is required by lenders. The mortgage is secured on the property in Spain.

Spanish lenders assess eligibility for a loan on the applicant's ability to service the loan and not potential rental income from the property. The general guideline is as follows: of an applicant's net income 35% should cover existing outgoings and the monthly repayment on the Spanish Euro mortgage. If you are self-employed income is assessed as the average of the last three years' net income. Rental & investment income will also be considered. If employed a lender will base your income on your payslips and the amount that is credited to your account monthly. Outgoings considered are liabilities such as mortgage/rent in the UK, personal loans & maintenance commitment.

For example - If you have a net monthly income of £2000 with a UK mortgage of £500 and no other outgoings. Taking into account 35% of the income, that is £700, a borrowing with a monthly repayment of £200 could be considered.  

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Taxes & Other Costs

There are two Property Taxes:

• Impuesto sobre bienes inmeubles/IBI - based on the fiscal value of the property
• Rendimientos del capital inmobiliario - based on the fiscal value, and purchase price.

Fees payable when buying in Spain are approx. 11%. If you take out a Spanish mortgage a further cost will be passed on to you by your notary for registering the charge of the lender with the land registry.

Valuations are carried out by the lenders and typically start from 285 Euros. The Arrangement fee is approx. 1% of the loan amount.

Propertyfinance4less charges a non-refundable arrangement fee of £75 (£100 if you are resident outside the UK) to cover overseas phone costs & postage. A commission of 1% of the total loan amount is payable, however, in most cases we receive an introducer's commission from the lender and therefore little or no charge is passed to you. For example, in Spain some lenders pay a 0.5% commission and in this case you would pay the difference between 1% and the amount received as commission i.e. 0.5%. Please speak to one of our consultants on this matter for further clarification.

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Questions & Answers

How much can I borrow ?
Complete our quotation request and we will send you a personalised quote confirming the maximum amounts for which you can be considered over the terms available. The information we provide is based on current rates and lending practices of the major lenders in Spain.

Can I buy in the name of a company ?
It is possible to buy a property through an offshore company but you should seek legal advice.


What supporting documents do I need to provide with an application?

APPLICANT DETAILS

• Photocopy of your passport (s)
• Proof of residence in the UK i.e. Driving license or Council Tax
• Three months' personal bank statements illustrating income & outgoings declared
• Name, address, telephone and fax numbers of present bankers who will be contacted and requested to provide a full credit reference

CONFIRMATION OF INCOME

If Employed

• Confirmation of employment i.e. contract or reference from your employer (s) stating income, your position, start date of employment gross annual salary and associated bonuses
• Three most recent pay slips and last P60

If Self-Employed

• Last two years' audited accounts
• A letter from a chartered accountant confirming the figures and personal drawings
• Letter of Confirmation from Accountants (if applicable) of personal drawings from the business on an annual basis
• Last two years' tax returns
• V.A.T. returns for the current year (if applicable)

Other sources of income

• Last two years' tax returns
• Copy of tenancy agreement if rental revenue to be included
• Annual statement of pension or retirement payment details

CONFIRMATION OF OUTGOINGS

• Most recent annual mortgage statement and written up-to-date proof of the current monthly repayment
• Copy of tenancy agreement if renting currently
• Copy of any loan agreement (s) in place
• Copy of most recent credit card statement
• Copy of Decree Nisi or any such documents confirming maintenance commitment

PROPERTY DETAILS

• "Nota Simple" available from Property Register
• Last statement or IBI tax when available
• Title Deed of the Property "Escritura de Propiedad"
• When property is built by developer - copy of the "Escritura de Division Horizontal"
• Deed of Property
• Private contract (if any, or other letter) when available
• If the property is government grant photocopy of the "Cédula de Calificación"

CONSTRUCTION/REFURBISHMENT

• Deed of Property - for the plot of land and Nota Simple
• "Obra Nueva" - Deed of Construction
• Construction Licence "Licencia de Obras"
• Budgets/Plans/Estimates - Officially approved by the "Colegio de Arquitectos"
• If the property has a mortgage copy of the monthly payments

ADDITIONAL REQUIREMENTS

• Proof of personal contribution to the purchase

NOTE:

please be aware that the information provided by Another World Properties is provided on the basis that it is intended as a guide and as such is not guaranteed. See the disclaimer for further information.