Frequently Asked Questions

About bank processing

How much money can i borrow?

Normally, maximum amount requested to the bank will not exceed 80% of property´s valuation ( excluding trading taxes ). In spite of some financial institutions and for some professional groups can get 100%.Another relevant limit is that resulting share for mortgage loan must not exceed 40% of justifiables incomes.

How can i pay monthly?

It depends on each personal situation. As a reference it is valid what some entities call "avaliable monthly net" , which is calculated by subtracting Eur 500€ from net monthly income and subtracting other Eur 120 for any family member in charge of mortgage´s holder.This is an approximate amount.

What criteria is the best to select my mortage?

It depends on personal situation. If you want security and no matter that nominal rate on your mortgage is higher we recommend a fixed rate mortgage. If you prefer to pay a lower monthly share, we recommend longer term variable type mortgage. Mixed type mortgage combines the security of a fixed rate with a variable interest rate.

What is the best term?

Depends on financial situation of each person. In principle, the shorter less interest you pay. On the other side the amount of installments to pay is largest.

What kind of documents are needed to get a mortgage?

Last trhee payrolls or last three V.A.T assessments, last income declaration, confidential goods declaration (optional), purchase contract, simple note of property registry and last receipt of real state taxes (urban contribution).

How long it takes to get a mortgage?

Altough it depends on financial institutions, usual time frame is usually between ten days and one month.

What is better a fixed loan or variable rate?

Depends on financial situation of each purchaser. A fixed loan guarantee that the share will be maintained altough interests fluctuate. Main disadvantages are shorter deadlines (10 or 15 years insted of 20 or 25 of one variable) and in this moment interest rate is higher than a loan-type variable. All these causes make the cost of monthly payment to be significantly higher. On the other hand variable rate loan has the disadventage of a possible rise in interest rate that varies monthly fee and hamper payment of that fee. Main adventages are exyension of deadline and a lower amount of interest rate. This ensures that monthly fee is lower or we get more funding for same quota and this make easier to have access to housing. To limit risk of rising interests rates, variable interests loans usually add some ceilings and if they are overcome, loan holder is not responsable.

Can we negotiate commissions?

Of course we can. All are optional and negotiable despite what financial institutions say.

What costs will i have when prompted for a mortgage?

At the time of formalizing a mortgage there are usually some costs like: notary, registering property, agency fees, valuation, bank charges abd transactions taxes involving property rights.

About Buying Property

What people are involved when processing a mortgage?

The people involved in processing a mortgage are: the seller, the buyer, the bank, the notary, the management agency and the property registration.

What are the legal aspects to process a mortgage?

You must go to the registration of property and a notary, there will give you all the information you need. It is also advisable to seek advice to a lawyer but is not required.

What is the Property Registry? What is the use?

In the property registry, you can verify through a simple note, which the seller is really the owner of the house you want to buy and make sure if there is any charge over the property. The simple note is issued the same day or the next day. It costs approximately 6 Euros The consult to the registry aims to prevent future problems as it is a legal guarantee.

What role does the notary?

The notary informs all judicial and legal aspects that occur in a transaction for the sale of a property. It is a legal person and provides legal certainty to the documentation that is presented by both parties (buyer and seller) in respect to housing. The notary verifies this documentation in order to verify that everything is ok. The State provides the fees of notaries who are set on a scale that changes depending on the amount of the price. The notary usually acts: as independent advisers on both sides, checking all documentation is fine; and report on key aspects of the purchase: price and payment, physical and spatial aspects of housing. It also reports the consequences that come with not paying tax in a sales transaction. It also acts as a notary public, giving legal guarantee to the contents of the sales contract. Compose a document that warns of risks or problems that may arise and that measures should be taken in the event of any to fix them.

Do I need a lawyer to buy a home?

The lawyer is not required in a transaction for the sale of a house but if is advisable to seek advice. It is the person involved in the whole process. His work is based on studying the actual situation of housing, if ther are any charges on the property or not and verify the ownership. He Will seek what is the most appropriate legal form to acquire the property and avoid future mishaps. in short, he informs and advise you until the end of the process of what is the most recommended acquisition of the estate legal formula.

What is the documentation required to buy a new home?

To prove the character of this type of housing is necessary to provide in the notary: urban card, cadastral card and certificate of occupancy. The legality of the construction and use is credited to the following documents: Building permit and competent technician certification stating that the same has been completed according to the project approved by the city council, license of first occupation of the building (related to habitability ) checking the effectiveness of compliance with legal regulations, certificate of occupancy and the registration of the property.

What is the documentation required to buy a second hand property?

Is necessary to include the latest receipt of property tax paid by the seller, the original ownership scripture duly registered in the property registry. On it, must be proved that that the seller is the owner and should further comprise all the physical characteristics of the property you're buying, the Certificate issued by the president of the community of owners certifying that the seller is to date in the community fees, so you can ensure that the house you buy has no financial obligations towards the residents.

What do I have to do when I have all the documentation needed for my new home?

First, you have to go to the notary office where the notary will help and advise you to make a success the sales transaction, by creating public scripture (document certifying the acquisition of property). The notary will prepare the scripture and authorize it, through technical advice and warning of compliance applicable, both fiscal and planning as civil and administrative provisions. The scripture is indispensable and obligatory when register at the property registry.

What should include the public scripture?

Scripture must include: The parties involved (buyer and seller); physical description of the property; the title of ownership (Scripture of which the seller bought the home in its day); the registration of ownership title acquisition on behalf of the seller; their value; charges of the property if any; payment of the community fees; the sale price and what is the form of payment; fastening operation as stipulated in the various administrative regulations and tax obligations are derived from nature itself. Once explained and read the scripture by the notary, you must sign jointly with the notary and the seller.

How is managed and processed the purchase scripture?

First, is necessary to issue the copy authorized by the notary; then you have to pay the taxes corresponding by type of property (new or second hand) to the public finances; continues with the presentation of scriptures in the property registry; and ends with the registration. It is desirable to alter cadastre ownership of the property.

About Property

What is the tax on the increased value of urban land?

It is commonly known as municipal capital gains. It is a municipal tax on real estate income urban, which are produced by the transfer of ownership. Only falls on urban property, ie gravel land value and not construction. The chargeable event occurs when there is a transfer of ownership and is on the increase in value that have experienced urban land during the period between the purchase and sale.

What is the property tax?

It is a direct tax that is required on a mandatory basis by municipalities and their management is shared by the state administration, levied on the assessed value of the property. This tax, unlike others, has paid each year. On 1 January of each year is charged. This tax has to be paid at the time you are an owner of the property that you purchased (new or used). Keep in mind that the first year in which you acquire the home to the seller you pay a proportionate share of the tax due that year to the time that has owned that property.

What taxes will I pay if I buy a new home?

VAT, transfer tax and Documented Legal Acts and property tax.

What taxes do I pay if I buy a second hand home?

Transfer tax and Documented Legal Acts, tax on the increased value of urban land and property tax.

Am I required to hire a damage insurance to cover the value of the appraised property?

According to the Spanish mortgage market law you are obligated to have a damage insurance on the property appraised. Not having this insurance can be considered as a serious fault by the bank that gave you the loan. It is also desirable to obtain other insurance to cover any mishaps as a multi-risk home insurance and life insurance or loan amortization.

What is the value my home?

Not have to match the price you paid for your home or the price at which you could sell it with the appraised value. When granted a mortgage loan, the banks are set to value ratio to grant you the amount you have requested. Typically risk coverage offered by banks does not exceed 80% of the appraised value but there are entities that reach 100%, but nowadays this is very rare.

Guide to buy a house in Spain >