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Whether you are going to settle permanently in Spain, or regularly travel to your second home in this country: you will first have to arrange the financing of your Spanish dream home. In some cases it is possible to finance this yourself, for example when you have built up sufficient capital yourself, but in most cases a mortgage is the chosen option. On our website you will find concise information about the mortgage and financing of a home in Spain. In this article we take a closer look at this information.
The first step
Before you actually start looking for your dream home in Spain, we advise you to find out the options if you need financing to avoid disappointments. You can always check whether you can use the equity of your home in your country. You can also look at the options that the Spanish mortgage lenders can offer you. But how do you start? It is possible to go to a bank yourself to take out a mortgage. But we usually advise you to be personally guided by an independent mortgage broker. In this way you will not run into language barriers and you will receive independent advice and guidance during the process. This person is in contact with the leading national and international banks, so that they can search for the best rates (volume purchase) and conditions for you.
As soon as you have found your home, it is also wise to immediately look for a lawyer who will check everything for you in the legal field. This includes, for example, checking whether there is no debt on the house. We are happy to help you put you in touch with the professionals from our network.
In addition, you must have a number of things in order before you apply for a mortgage: sufficient equity (more on this later) and your NIE number. You can compare this with the citizen service number and you need it for a number of important things, such as opening a bank account, signing the (provisional) purchase contract and therefore also applying for the mortgage. The waiting time for the application for your NIE number can be up to a few weeks and sometimes even months, so arrange this on time.
To apply for the mortgage, you must of course also show the necessary paperwork. Therefore, also collect the following documents:
- The three most recent pay slips for proof of your income
- Account statements for the past six months
- Mortgage statement for your own current home
- Copy of your ID
- Extract from the BKR or Extract Credit Registration Belgium
Standard mortgage in Spain
In the Netherlands, we currently have a choice of two different constructions when taking out a new mortgage: an annuity mortgage or a linear mortgage. In Spain, this is always an annuity mortgage as standard. In this case, you pay a fixed monthly amount to the bank as repayment, during the term of the mortgage. If there are no major changes in the interest rate, you pay a fixed amount every month during this period. Keep in mind that the term of a mortgage in Spain is on average a maximum of 25 years (and a minimum of usually 10 years). The mortgage lender will make an extensive calculation for you, so that you immediately get an idea of your monthly costs.
Equity and additional costs
When you compare the application for a mortgage in Spain with an application for a mortgage in the Netherlands for example, you will not only see a difference in the constructions (see above) but also in the financing itself. In Spain it is not possible to have the entire amount of the house financed by means of a mortgage, but up to a maximum of 60 to 70% of the lowest value (purchase price or taxation) as a non-resident. The remainder of the purchase price plus the 12 to 15% buyer’s costs must be paid from your own resources. So keep in mind that before you start orienting yourself on the Spanish housing market, you have already built up enough equity to avoid disappointments. In addition, you will have to deal with a number of additional costs when signing the purchase contract.
But what costs are these exactly?
- The reservation deposit
This is usually an amount between € 3000 and € 6000. With this you give the seller the guarantee that you are genuinely interested in the property and the property is removed from the market. This amount will eventually be deducted from the total purchase price. - Advance payment of the purchase price
You transfer this amount (10% of the purchase price) to the seller with the preliminary purchase contract and also serves as a guarantee. Of course, this will also be deducted from the total purchase price at a later date during the transfer. - Attorney’s fees
The rate differs per specialist, between 1 and 2% of the purchase price. - Transfer tax
This varies by region. But this amounts to an average of 10% of the purchase price. - Broker’s fees
Unlike in the rest of Spain, buyers in the Valencia region pay a 3% brokerage commission, in the other region the brokerage commission is paid by the seller. - Notary and registration fees
On average 1% of the purchase price. - Mortgage costs
This depends on the rate of the mortgage lender. - VAT or transfer tax
You will not encounter this in all cases, only when it concerns a new-build home or a house that has not yet been officially registered. In this case you pay an amount of 7 to 10%. However, this also varies by region. In Gran Canaria they do not charge these costs, there you pay 5% sales tax instead.
Personal guidance of Dream Properties International
The advisers of Dream Properties International not only help you find your dream home, we also offer you personal guidance during this process. In this way we get you in touch with the specialists in our network to ensure that the application for your mortgage runs smoothly. In any case, start arranging the matters mentioned previously in time to complete the purchase process quickly and to secure your dream home. Would you like more information? Please contact us by phone or send an e-mail.
