Mortgage & Finance

There are several laws and conventions in Spain, which can make a Spanish property purchase a little daunting. At ABC Property, we want to assure you that this process can be simplified as much as possible by our team of experienced advisors who have extensive knowledge of both the domestic and Spanish mortgage systems.

Financing
Often, a Spanish property can be financed by releasing equity from your own property and that is where our combination of experience come into their own.Upon finding your dream home and agreeing the purchase price with the vendor it is important to take professional advice to ensure the vendor is the true owner, the property is legal, and there are no debts, charges or other legal encumbrances that could be passed on. There is a statutory 10 year guarantee on new properties,

Spanish banks can also offer you a mortgage with competitive rates and conditions. Normal Spanish mortgage terms are around 60/80% valuation with a 15/20 year repayment period and current interest rates possibly as low as 3.5  The formalities are fairly simple with the banks with the decision to lend based more on the valuation of the property than your credit history. Mortgages with a Spanish bank can often be confirmed within 7/10 days.

Contracts
A 'pre-sale contract' will be prepared and a deposit paid to take the property off the market. The contract will set out the conditions of purchase, what is included in the price, the payment schedule, who is responsible for the transaction costs and any 'subject to' conditions if appropriate. This contract is legally binding to both parties with the purchaser forfeiting the deposit if he changes his mind, and the vendor liable to pay back double the deposit if he himself changes his mind

The final public contract or title deed is formalised by the public notary upon completion normally 30 days and confirms the contract is legal and the purchase monies have been paid. The escritura is then presented to the property register for inscription.

Legal Work
Your Solicitor will apply for your NIE / fiscal number which is essential for major purchases and tax payments, obtain a copy of the escritura from the 'land registry' to prove ownership, and the nota simply to check mortgages or other charges against the property. He will check the catestro certificate which is the legal description of the property, land & boundaries, and if community charges apply then ask to see that these are paid to date. If its a resale property he will ask for the last receipts of the property and wealth tax as these can be passed on to the new purchaser if unpaid, and if purchasing from a new development the deed of declaration of the new construction, the construction licences and occupancy permission. He should also check if the local authority planning department has any development plans in progress that may affect the area where the property is located.

Taxes
The rule of thumb is to allow an additional 10% of the 'declared' purchase price to cover the transfer tax, notario and solicitor fees. The transfer tax for Fuerteventura is calculated at 7% of the declared purchase price on the escritura for a resale property, or IVA at 7% plus 0.5% stamp duty if buying a new property from a developer,
or 15% if purchasing a building plot. Then we have a tax based on the increase in the value of the land since the last sale. The notario will charge approx 2% including some tax & registration fees, and your solicitor around 1%.

Ongoing Fees, Annual Taxes & Utilities
Owners of property in Spain are liable for municipal real estate taxes or rates based on the official rateable value of the property and there is also a wealth tax to pay yearly on your 'net' assets. These taxes are much less than UK & Irish
rates. If your property is part of an apartment complex or urbanisation then community fees will be charged to cover the cleaning, maintenance, lighting and upkeep of the common areas , swimming pools & gardens. Electricity and gas
will be cheaper than in the UK & Ireland and water normally metered so you only pay for what you use. Telephone and internet connections are right up to date with the latest technology.

The above information is intended as a guide only and should not be taken as a substitute for qualified legal advice as property laws in Spain can change from area to area and time to time.