Your important Questions

You will find answers to some of the most important questions you should ask and things you want to know when considering buying property in Spain.

Residential, holiday home or investment?

Do you want somewhere for regular holidays or do you want somewhere as an investment to pass on to the kids or do you seek a genuine second or permanent home? If you are relocating full-time with a family then schooling options will need to be investigated early on (and places applied for months in advance), whilst retirees will need to check on medical facilities and pharmacies. On the other hand if you are banking on renting out your property you will need to consider the ideal size and type of property, the sort of features that rentals might expect (outside space? Use of a pool?) as well as popular locations. You should create a brief that sets out your list of requirements, from number of bedrooms, type of property to the features you wish to have.

Purchase process explained

The purchase process begins with a reservation agreement. This is a contract that freezes the purchase price and takes property off the market. Reservation payment in region of €5,000 is required and depending on developer. Next step is signing a full private purchase contract (contrato de arras) between the buyer and the seller. Within this time your lawyer should complete all the searches on the property - confirming that the seller own the property being sold, there are no mortgages or charges, that planning consents are in order. Once both parties sign the main contract, it is binding. The arras contract or full private contract will usually require a 10 to 30 per cent deposit to be paid. The buyer is then committed to pay the balance of the price, and the seller (once the money has been paid) must transfer ownership to the buyer.If the seller pulls out of the transaction he must return double the amount of the deposit received by way of compensation. If the buyer pulls out he will lose the deposit paid. The property sale is formally completed when the title deed (“Escritura de Compraventa”) is signed before a public official called a Public Notary, or Notario. This will happen at their office and be accompanied by the agreed final payment and all the relevant purchase taxes. The Escritura is then presented by the Notary to the Land Registry for registration and the property is passed to the new owner. Final registation of the title deed can take several months. With a new-build property, obviously completion can take a lot longer, and the payments are split over stages of the build process, and the developer should provide bank guarantees against each payment. This protects your payments in the event the developer fails to complete the property or goes bust. Finally, make sure that you have insurance for your property, ensure all service contracts are in your name (telephone, water, electrics etc.) and register your ownership of the property with your local Town Hall.

New or Old

Buying a “tried and tested” resale property you can see how the property works from a layout and position of the sun point of view. You might well get something that has been built in a great position that would not be available now. Equally, if a vendor is desperate to sell their home, you might get one at a great price compared to a new property of the same spec. But all said, there are several definite advantages of buying new if you can afford it: You can choose your fittings from a selection of options to make your holiday home bespoke. Sometimes you can tweak the layout too, not just tiles and fixtures. Better build quality. Improved building controls mean that new homes need to meet certain standards. They have to be well insulated, for sound as well as heating, more eco-friendly and comply with regulations for earthquake resistance. B Modern layouts. The style will be contemporary with spacious living areas and outdoor terraces. On the minus side, the pay off for larger living areas does mean slightly smaller bedrooms. Cherry-pick the best location. If you’re hoping to make a return on your investment, choosing the best plot, with the best view, is always going to appeal to renters and also buyers when you want to resell. Less upkeep hassle and costs. Everything is new, you won’t need to budget for repairs – yet! Aftersales care. Buying when building work is ongoing means you’ll have the developers team will still be onsite. Any niggles or flaws in the property will be fixed easily. Ten-year warranty. New-builds come with certain guarantees so problems can be quickly solved.

Financing a property purchase

Some overseas buyers purchase without a mortgage, but it is possible to obtain finance to buy a home. Spanish banks and international banks offer mortgages; some also offer specific deals for expats from certain countries.

As an overseas buyer, you may find you can only borrow at a lower loan-to-value (LTV) rate than Spanish residents, meaning you’ll need a bigger deposit. Spanish residents can generally borrow up to 80% of the property’s assessed value, but non-residents might be limited to 60–70% LTV, depending on the mortgage type.

Mortgage lenders will not complete a mortgage agreement until you own a property. It’s important to include a clause in the property’s purchase contract allowing you to pull out if you cannot acquire a mortgage.

In terms of affordability lenders will usually use as a maximum affordable monthly payments for ALL credit commitments including future mortgage payment as 30-35% of your net salary. It's wise to take into consideration any hire purchases, loans and mortgages you hold worldwide. as this could cause mortgage unaffordable despite high earnings. For more information please contact us.

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Other things to consider

More tips to come. Meanwhile contact us with any questions you may have and we will be happy to assist.