If you are about buying a property in Spain then you should start arranging your Spanish mortgage almost before you do anything else. Leaving the financial side of your Spanish property purchase until the end does you no favours whatsoever. If you leave it too late, and have to arrange your Spanish mortgage in a rush and under pressure, it is likely that you will get an expensive and inflexible Spanish mortgage. And never forget that Spanish mortgages run for many years so you will have to live with the consequences of you decision for years to come.
1. Find out how much you can borrow
This is dependent on your income and the type of mortgage you want. Bear in mind the maximum "loan to value" amount (how much of the property value the bank would be prepared to lend you) and that you should not over-stretch yourself to make the mortgage payments.
2. Obtain your N.I.E.
If you're serious about your property search, apply for your "Numero de Identificacion de Extranjeros" (NIE), or Foreigner's Identification Number, as soon as you can. It's a legal requirement when buying a home in Spain. Though you can wait until you've found a home, the earlier you arrange it the better.
With these matters dealt with, you're in a much better position to go ahead with the purchase once you've found your ideal property. The next steps for you are:
3. Sign a reservation contract (off-plan)
If you're buying an off-plan property, at this stage you sign an agreement and pay a small fee in order to reserve the property. You will usually be asked to make payments in stages throughout the construction of the property.
4. Obtain a "nota simple"
The "nota simple" is a Spanish Land Registry Certificate that confirms the legal owners of the property you're buying and shows any debts that exist on the property. This can be alternatively your lawyer or estate agent will be able to obtain this. You'll need to provide a recent version of this document when applying for your mortgage.
5. Set up a local bank account
You'll need a bank account in Spain during and after the buying process. Apart from the property itself, you'll need to pay professional fees, taxes and charges on the purchase and utility bills and potentially management fees once the property is yours.
6. Instruct your lawyer to complete legal investigations
your lawyer will do the necessary checks on the owner and title deeds to ensure that the sale is legal. Insist on seeing other documentation pertinent to the property - your lawyer will be aware of the documents that are necessary to check to safeguard against illegally registered properties or unpaid tax or utility bills. These include:
- Registered title deeds ("Escritura Publica")
- Annual Property Tax receipts ("Impuesto sobre Bienes Inmuebles", often referred to as the "IBI")
- Property Registration Certificate ("Certificado Catastral")
- Plan of building plots ("Plan Parcial") for properties located on urbanizations
- Paid-up Community fees for properties located on urbanizations ("Comunidad de Propietarios")
- Paid-up Utilities bills (e.g. electricity, water, rubbish collection)
7. Appointment of a notary
A Notary ("Notario") is a government official who oversees the completion of the property transaction ("escritura de compraventa"). His duty is to ensure the legality of the contract, but importantly, is not responsible for verifying the accuracy of the statements within the contract (which must be undertaken by your lawyer). If you sign a mortgage with us, we will engage the notary on your behalf in order for the contract to be signed and the transaction completed.
8. Pay a deposit (re-sale)
If you're buying a re-sale property, you are now able to negotiate a final purchase price in light of the findings from the survey. You will then sign a private purchase contract and pay a deposit, usually 3000€-10% of the agreed price. Make sure you fully understand the contract - at this stage, if you pull out of the sale, you will forfeit your deposit. If the seller pulls out, he must pay you double the value of your deposit.
9. Pay for the property and applicable taxes
At this point you'll pay the remainder of the purchase price plus all the charges, taxes and fees detailed in the 'Costs to consider' section.
10. Title will be registered at the Land Registry
The very final step of the buying process is for your lawyer to advise you when you can expect to receive the full title deeds ("escritura publica"), which usually takes a few months to process. When these documents have been completed and returned by the local registry office, you will officially become a homeowner in Spain - congratulations!
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