Buying Process
- What are the costs to buy in Spain ? The costs to buy property are significantly higher in Spain than other EU countries these can be summarised as follows;
Taxes 10%
Stamp Duty 0.5 > 2%
Solicitor >1%
Notary >0.5%
Mortgage >1.5%
Valuation >€800 approx (dependent on value)
As a safe guide you are best to budget around 15% in costs associated with purchasing in Spain. Example: A €100,000 property you can expect to pay in the region of €15,000 in fees.
But it is worth it !! with Holiday let rental yields in the region of 5-10% per annum and a glorious place in the Sun for you and the whole family to enjoy.. do not be put off by purchase fee’s, the memories & lifestyle choice will be well worth it.
- How much deposit would I need ? If you live in Spain and are a tax resident you can obtain a mortgage up to maximum 80% of the value or purchase price. If you are a Non Resident you can obtain a maximum of 70% of the value or purchase price.
So on an example of €100,000 you would need €20/30,000 & the 15% costs of €15,000 total €35,000 > €45,000
- What if I don’t have enough deposit ? If you are a UK resident & Home Owner, we partner with a UK mortgage specialist who can help to release further capital from the equity in your home. You could release up to 85% of the value of your home to contribute further funds to the purchase of a property in Spain.
Some even have secured 100% finance by raising some or all the funds on their UK property in addition to a smaller Spanish mortgage. Fill in the request for a callback for more information on 100% financing options.
- What would I need to be able to place an offer on a Spanish property ? You can of course put an offer on a property at any time if you have the funds in place.
However if you are serious about buying in Spain, then we recommend to have your NIE number already sorted ( we can arrange) and if a mortgage is required a mortgage offer in principle in place, these two things can put you in a strong negotiating position as you will be ready to complete quicker than most other buyers. You could even save €000’s by snapping up a bargain. Putting a ‘Limited Power of Attorney’ in place will also enable you to buy from a distance, which many investor clients do. We or your lawyer can act in this respect.
- Will I need a Lawyer / Solicitor ? A solicitor is highly recommended if not essential, and if buying with a mortgage you will need a solicitor as the bank will want to ensure the property title is good and that there are no complications with the property’s legals. In addition you will want peace of mind that this significant financial investment is sound.
- When do I pay my Deposit ? At the point of signing the preliminary contract sale, you will need to transfer the deposit to the Lawyer, you are committed to the purchase at this point, and your deposit is at risk, that is why it is vital that all funding is in place such as a mortgage offer so that there is no rush or panic to find further funds if required.
- What happens on Completion Day ? The transaction completes physically at Notary offices, you or your power of attorney representative will need to be there to sign the purchase and mortgage deeds. Its an exciting day, but also can be a stressful one, that is why we are well placed to assist you throughout the whole process.
Mortgage Process
- How much can I borrow ? This depends on your age, income and circumstances. Generally mortgages are granted up to a max age of 75, for High Net Worth clients, this could be more.
Generally you can borrow between 35 – 45% of your net Monthly income dependent on the bank.
So if your household net income is £9,000 a month ( after expenses and deductions) then your new Spanish mortgage payment cannot exceed approx £4,000 a month.
Click our interactive mortgage calculator to see how much a mortgage will cost per month >>>
- How much deposit would I need ? If you live in Spain and are a tax resident you can obtain a mortgage up to maximum 80% of the value or purchase price. If you are a Non Resident you can obtain a maximum of 70% of the value or purchase price.
So on an example of €100,000 you would need €20/30,000 & the 15% costs of €15,000 total €35,000 > €45,000
- How do I get a mortgage offer ? Firstly we recommend chatting with us to see if your circumstances allow you to apply for a mortgage. There is no obligation or charge to see if we can help. If we believe we can help we will request documents from you and submit these to the recommended lender to obtain a ‘Mortgage in Principle’ once we have this and you decide to proceed with a mortgage, then we can arrange the valuation and then obtain the Mortgage Offer.
- What documents do I need to submit ? Banks require very similar documents to UK/Irish lenders:
Personal
Passport
Utility bill dated in the last 3 months
Last 3 months Bank Statements
Proof of Deposit
Experian Credit file
Tax id number (TIN) or Unique Tax Ref (UTR) & National Insurance Number (NINO)
(NIE – Spanish issued number, this will be needed prior to offer)
Employed
last 3 months payslips
Work contract or P60
Self Employed
2-3 years accounts. Some lenders will allow only 1 years accounts. ( we can advise)
Self assessment Tax return
OR
Accountant certificate from a reputable accountancy firm.
Last 3 years Business Statements may be requested.
( The above is not an exhaustive list and is subject to lender requirements)
- Will I need a Spanish Bank Account ? In order to obtain an official mortgage agreement & offer, you will need to open an account with the bank giving the approval. From this account will be deducted the valuation fee ( approx. €500 – €800 ) and other associated costs. ( full costs will be advised) This is why we recommend obtaining an NIE and Power Of Attorney at the outset, so that you will not have to be there physically to open an account.
We can do a facetime video chat with you at time of opening to confirm your agreement to proceed with all aspects of the process.
- Can I arrange everything remotely ? Yes getting mortgage approval, valuation and mortgage offer can be done remotely. You may need to give ‘limited power of attorney’ if you are not physically able to be present especially to open a bank account or obtain an NIE.
Although we recommend it best to be in place during the completion, it is possible to assist you to purchase while remote or outside of Spain and we can keep you updated throughout the process.
- What rates can I get for the mortgage ? Rates are low and it is a great time to secure a mortgage. Rates range from 0.99%* above Euribor to fixed rates at 3.5% What is suitable to you will be dependent on your view to risk and what is best for your needs, which we can provide all relevant information on. *Current Rates are subject to Lender updates.
- What are the advantages of using a Spanish mortgage to buy ? Aside from the obvious advantage of not having to use you own hard earned savings, you may be able to benefit from a reduced tax bill, either from an inheritance tax or rental income tax liability. In addition with the stronger Euro and weaker Sterling, getting a Euro mortgage may reduce exchange rate risks.
A mortgage may give you the ability to up your budget to a better or bigger property too, one that the whole family may enjoy !
Other Concerns
- What about Brexit & buying in Spain ? No-one is able to predict the legal outcomes from Brexit. However buying in Spain has always been a popular investment and lifestyle choice that was popular in the 1970’s prior to the formation of the EU and throughout EU membership, so we don’t believe this will change Pre or Post Brexit.
In fact many buyers want to secure a property prior to Brexit in order to get into Spanish Property Ownership prior to any residency or tax changes that may come post Brexit.
Additionally we are see-ing an increase in enquiries and general building in Spain from Major Builders & Developers such as TaylorWimpey / PrimeInvest / Kronos. We believe now is the time to secure your dream home abroad.
See this article for more info: Reasons to buy in Spain
- What about renting out my property for holiday income ? Spain has a fantastic holiday rental income yield, you can expect between 5-10% gross return dependent on area and facilities. We can guide on the best areas and properties to invest for this revenue stream. Be aware that there are extra government legalities to complete when renting for holiday let income. We can give advice on this and other tax related matters.
- Can you help with submitting any relevant tax returns ? Yes as registered mortgage & fiscal advisors, you can instruct us to pay your annual property and associated tax bills, we provide a one stop shop for all Spanish property and tax related matters.