How to Buy Property in Spain
The 11 Steps to the Buying Process
- Confirm how much you can borrow by speaking to one of our mortgage brokers
- Open an account with a reputable Foreign Exchange dealer (ask about our panel of FX dealers)
- Agree on the price of the property and sign the Reservation Agreement. A small fee will need to be paid at this stage in order to secure the property for 30 days. Should the sale go ahead as planned then this fee will be deducted from the purchase price. If the sale falls through then this fee will be forfeited.
- Allow for an additional 10 - 20 % on top of the purchase price. This will include hidden costs such as legal fees, transfer tax, Notario fees and Land Registry.
- Arrange a mortgage
- Arrange life insurance to cover the mortgage
- Open a Spanish bank account
- Arrange building insurance (existing property only - not off-plan)
- You will then sign a contract giving you the option to buy which will specify the time frame in which the sale should be complete. Once this is signed, a larger deposit of 10 - 20 % of the full purchase price will need to be paid
- Pay the balance of the asking price within the specified time frame and the Notario will prepare the conveyance document (the Escritura de Compraventa). Once this has been signed in the presence of the Notrario, the document will be submitted to the Land Registry
- Complete – Congratulations !!
Paying your deposit
Depending on if you are buying an existing property or a 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
When purchasing a property, you will be required to sign a preliminary promissory buying and selling contract (a contrato de promessa de compra e venda). Prior to this, the property registration certificate and the property tax document need to be obtained by your legal representative. The preliminary agreement will outline all the details of the property, as well as the details of the seller and buyer. If you are buying with finance, it’s very important to include specific details of your mortgage within the agreement. Portuguese law will ensure both parties are protected whereby if the purchaser pulls out of the agreement he forfeits the deposit, and if the seller withdraws then he will be liable to pay double the deposit to the purchaser.
What type of property can I get a mortgage on? We can arrange mortgages for individuals or companies to buy…
- Main homes
- Second or Holiday Homes
- Rental or Investment Properties
- Off-plan / New Build Properties
- Commercial Properties
- Equity Release mortgages are available
- Bridging Finance is also available
What currency will my mortgage be in?
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.
After your mortgage has been arranged and the Notary has completed the necessary checks, the final stage is to sign the Deed of Sale, known as the Escritura de Compraventa. You can sign this agreement in person at the Notary's office, or grant a Power of Attorney to do so on your behalf.