Have you finally decided to take the leap and buy your dream home in Spain? If you are lucky enough to be a cash buyer then congratulations! However, some people will need to take out a mortgage to pay for the property. Good news: Spain is a great place to do so as this wonderful country offers great deals for new home owners to finance their property. Here are a few common questions answered for you…
Why is Spain one of the best countries to take out a mortgage in?
For three reasons:
- No setup charges: as of June 2019, a new mortgage law established that the banks are now responsible for paying all set up costs such as Stamp Duty and Notary fees.
- Low interest rates: the lowest they have been for 30 years in fact!
- Option to repay with your countries currency, instead of Euros: as an initiative for non-EU citizens to take out a mortgage in Spain, you can now make the repayments in the currency of your home country.
What types of mortgage does Spain offer?
There are three types of mortgages offered by Spanish banks: variable-rate mortgages (the most common), fixed-rate mortgages and interest only mortgages. Know that variable-rate mortgages will vary according to the “Euribor” which is a base rate set by the European Central Bank.
How can I apply for a mortgage in Spain?
The application process is fairly simple. Here is a quick summary:
- Shop around and get initial assessments and quotes from different banks.
- Choose your bank and sign up. You will have to agree to the Terms and Conditions of the loan and pay an initial evaluation fee.
- Submit your application form and await an answer from the lending entity.
- If you haven’t already, you will need to set up a bank account with the lending bank and deposit the Valuation Fee. If the valuation is no lower than the agreed purchase price and the property is legal, then you may proceed to completion.
- Receive the funds in your account and make a date at the Notary for completion and payment of the property and mortgage taxes. Once everything is signed, you will then become legal owner of the property.
As previously mentioned, this is a summarized version of the mortgage application process and we strongly recommend you work with a broker and a lawyer.
What documents do I need?
In order to apply for a mortgage in Spain you will need the following paperwork:
- NIE or Spanish Fiscal Identification number
- Proof of income
- A pre–agreement with the seller of the property
- Proof that all property tax is up to date
- Details of your current financial situation
- Copies of all your existing real estate deeds (both in Spain and any other country)
- Any prenuptial agreements, if applicable.
Are there any additional costs I need to know about?
Unfortunately, yes. Be sure to have the following in mind when calculating your budget:
- Property Valuation Fee: the lending entity will require a property valuation by an appraiser of their choosing.
- Mortgage Opening Fee: usually around 1%.
- Mortgage Insurance: it is a legal requirement in Spain to insure your home.
- Mortgage Early Cancellation Fee
- Mortgage Notary Fee
- Spanish Stamp Duty or AJD: this is the “Gestoria” fee.
- Land Registry Fee: to be paid upon completion of the purchase.
Knowing the exact conditions of a mortgage before hand is difficult, but know that fixed mortgage interest rates in Spain are usually between 2 and 4%. However, seeing as most Spanish mortgages are variable loans you will have to get a personalized offer from the bank of your choosing.
If you are considering purchasing a home in Spain and need a lawyer, the Premier Law team would be happy to help.
Please contact us at info@premierlaw.net or +34 952 764 483.
