How to Buy Property in Spain: A Step-By-Step Guide
Are you looking to buy property in Spain? This guide breaks down the intricate process into clear, manageable steps, tailored for the discerning, well-informed buyer.
Step 1: Assess Your Financial Capacity
Kickstart your property journey by consulting with a trusted mortgage broker to determine your borrowing limits. This crucial initial step lays the foundation for your financial planning.
Step 2: Set Up Foreign Currency Exchange
Ensure smooth currency transactions by opening an account with a reputable foreign exchange (FX) dealer. Reach out to us for recommendations from our panel of trusted FX dealers.
Step 3: Secure Your Property
Once you’ve identified your dream property, seal the deal by signing a Reservation Agreement and paying a nominal fee to reserve the property for 30 days. Note that this fee is non-refundable if the purchase doesn’t proceed.
Step 4: Budget for Additional Costs
Plan ahead by budgeting an extra 10-20% on top of the purchase price to cover miscellaneous expenses like legal fees, transfer taxes, notary fees, and registration fees.
Step 5: Arrange a Mortgage
Move forward confidently by arranging a mortgage that aligns with your financial circumstances and chosen property.
Step 6: Arrange Life Insurance
Secure your financial commitments by arranging life insurance that corresponds with your mortgage amount.
Step 7: Open a Local Bank Account
Facilitate seamless transactions by opening a bank account in Spain dedicated to managing your property-related finances.
Step 8: Arrange Building Insurance
Safeguard your investment by arranging building insurance, particularly crucial if you’re purchasing an existing property.
Step 9: Signing the Purchase Contract
Solidify the sale terms by signing a purchase contract, including a completion deadline. Typically, a deposit of 10-20% of the purchase price is required at this stage.
Step 10: Finalise Your Purchase
Complete the payment of the remaining balance within the agreed timeframe. The notary will prepare the deed of sale, the ‘Escritura de Compraventa’, marking the official transfer of ownership.
Step 11: Completion
Congratulations! Once all formalities are concluded and the deed is signed, you officially own the property.
Paying your depositÂ
Depending on if you are buying an existing property or new build, the deposit can range anywhere from 10 to 20%. At Worldwide Property Company we always encourage our clients to pay the deposit to the Notary, and not to an estate agent. This avoids any conflict of interest if you have to withdraw from the purchase for any reason.
Preliminary Purchase Agreements For Purchasing Spanish Property
Before finalising the property purchase, you’ll sign a preliminary promissory contract, known as a ‘Contrato de Arras‘. Your legal representative must first obtain the property registration certificate and tax document. This agreement outlines property details, seller and buyer information, and includes mortgage specifics if applicable. Spanish law protects both parties; if the purchaser withdraws, they forfeit the deposit, and if the seller withdraws, they must pay double the deposit to the purchaser.
What type of properties can I buy in Spain?
We can arrange mortgages for individuals or companies to buy:
- Main homes
- Second or Holiday Homes
- Rental or Investment Properties
- New Build Properties
- Commercial Properties
Equity Release mortgages and Bridging Finance are also available if you’re looking to buy property in spain.
FAQs
What currency will my mortgage be in Spain?
Although it is possible to arrange mortgages in all major currencies, it’s normal for a mortgage secured against a Spanish property to be in Euros.
What is the maximum loan amount (LTV%)?
Depending on the valuation of the property, or purchase price, non-residents can borrow between 60 and 70%.
What is the minimum loan amount?
The minimum mortgage available for non-residents is €100,000
How long is the term of the mortgage?
The mortgage term can be up to 25 years although some banks will limit this to 20 years, so long as you are not over the age of 75.
Do I need life assurance for a mortgage?
Although not required by law, the majority of lenders will request this as collateral against a loan.Â