Employees

1. Original plus copy of last 3 “nominas” (payslips)
2. Copy of last “Declaración de la Renta” - income tax declaration form –
    (P60 if from the UK)
3. Completed mortgage application forms
4. Original plus photocopy of Passport
5. Original plus photocopy of “Residencia” / NIE number
6. Copy of property “Nota simple” (Title deed extract) from the “Registro de la Propiedad” –
    (Land Registry)
7. List of assets

Self Employed

1. Copy of Tax returns of last two years
2. IVA (VAT) and income tax returns
3. Balance sheets
4. Last 3 bank statements
5. Completed application forms
6. Original plus photocopy of Passport
7. Original plus photocopy of Residencia / NIE number
8. Copy of property “Nota simple” (Title deed extract) from the “Registro de la Propiedad” –
    (Land Registry)
9. List of assets

** List of assets to include details of alternative income, other properties, cars, stocks/shares etc. This is to allow bank to accurately evaluate your financial standing.

Property valuation: Tasación
This is a fee paid to an independant company appointed by the bank which calculates the value of the property you are purchasing. It is against this valuation that the bank determines the maximum loan available. The cost of the valuation will automatically be deducted from your bank account. The cost is applicable whether your mortgage application is approved or denied.

Property (Land) Registry: Registro de la Propiedad
There is a small charge payable when information is requested from this office regarding the legal history of the property being considered for purchase.

There is also a charge payable once the purchase is finalised and the title deed is updated to register the new owner (and that there is a mortgage on the property, if that is the case).

Notary Public: Notarío
There are fees payable to the Notary who is the person that legally confirms the deed of sale and the mortgage deed as authentic and certifies the operation.
Note:- Any purchase agreement not signed in front of the Notary may not be legally registered.

Administration Fees:
There are administration fees that will be charged by the financing entity. These fees should not be confused with the fees charged by any professional engaged to act on behalf of the purchaser which will be charged for separately.

Bank Charges:
It is essential to ensure that all the costs and fees due to the bank financing the mortgage are fully explained. Ensure the information regarding lump sum payments or early redemption is clear and in writing – and that you fully understand it.

• It is customary to allow for an additional 10% of the purchase price to be set aside to
  cover all costs, fees and taxes.
• It is also customary to advance a “provision de fondos” – financial fund – to the lawyer
  handling the sale. These funds will be used to cover all the above costs to ensure the
  purchase contract is correctly executed and the property registered into your name.
•Once all necessary costs have been met the lawyer will refund any portion of the
  financial  fund that has not been used.
• The Lawyer’s fee will vary according to the purchase price of the property – it is usual to
  allow approx. 1.5% of the purchase price for lawyers fees.

Value Added Tax (IVA):
If a newly built house is being purchased there will be IVA payable of approximately 7% of the value shown on the Escritura / Title deed.
Stamp Duty (AJD) at 0.5% is also payable on new properties.

Transfer Tax:
There is a 6% tax (ITP) of the value shown on the Escritura / Title deed if the house being purchased is not new.

Stamp Tax:
This tax is between 1.5% and 2% of the amount of the mortgage loan. (0.5% of the mortgage guarantee value).

Capital Gains Tax:
According to current Law, the Local Tax on the increased value of the Real Estate (Capital Gain Tax - “Plusvalía”), is to be paid by the seller unless otherwise agreed by the parties.

** Be aware that the Tax Authorities may not accept the purchase price declared on the Escritura / Title Deed and have the right to increase the amount – and therefore the tax payable – if they believe an attempt to falsely declare the true value of the property is being made.

This usually occurs when the seller does not want to declare the full sales price in an attempt to reduce any possible Capital Gains Tax payable.

IMPORTANT NOTE:-
Speaking to a Fiscal Asesor/Advisor before entering into any agreement for the sale or purchase of a property in Spain should be considered to ensure you reduce your tax liability in line with Spanish legislation.
It will save heartache and nasty surprises in the future !!  

Before signing any legal document there are a number of basic items that must be fully investigated regarding the property you are interested in purchasing :-

1 – That the property is legally registered in the seller’s name at the local Spanish Land Registry (Registro de la Propiedad) so that there will be no problem in transferring the Title Deed into your name once the purchase is completed.

2 – That there is no registered charge/s against the property (this is shown in the Land Registry and should be on the Nota Simple)

3 – That the annual Real Estate Tax (IBI: Impuesto de Bienes Inmuebles) is paid at the corresponding Municipal Town Hall – the last receipt should be available to show that this tax is paid up-to-date.

4 – That, if applicable, the Community of Owners’ fees have been fully paid. The last receipt for this payment will show what is due to be paid by each owner and under what terms ;
It is essential to obtain an up to date copy of the Community Statutes as the rules and regulations stated therein will have to be abided by.

5- That the water, electric and telephone bills are all paid up to date – with no past date bills outstanding.

** If possible try to ensure that the vendors do not cancel the water, electric and telephone accounts related to the property. It is a lot easier, and more importantly, less time consuming to change a name and bank details on a contract then to set up new ones.!

Types of mortgage loan

Fixed:
The interest rate remains unchanged throughout the term of the loan.
You know exactly how much you are going to pay and the instalments will not change. You will not be affected by any fluctuations in the market interest rates.
The maximum term for this type of loan is up to 12 years.

Adjustable:
The interest rate is fixed for the first year and normally adjusted every year, applying a reference index plus a margin.
They are normally granted for terms of up to 30 years.

Mixed:
Combination of the other two. This is a loan with a fixed interest rate for a given number of years in the first phase of the loan, after which the interest rate is adjusted as in adjustable-rate loans.

Interest only:
New type of mortgage becoming available in Spain. Payment of interest only for a given number of years in the first phase of the loan, after which the repayment amount is adjusted as in adjustable-rate loans.

Is the fixed or adjustable rate better for me?

This depends on many factors, such as the interest rate market, forecasts of future evolution of rates, your purchasing power, your risk aversion, your convenience, etc.
In times of falling interest rates, an adjustable-rate mortgage is recommendable, however you also run the risk that the interest rates could rise.
If you prefer the security of knowing exactly how much you will have to pay throughout the life of the loan, then a fixed-rate loan is the one to go for.

Can I adjust the installment to my earnings and the rise in the cost of living?

YES. Certain mortgages available allows you to adjust the monthly payment on your mortgage to the cost of living, in order to keep your purchasing power at the same level each year and avoid any significant changes.

Fees and charges deriving from the request for a mortgage.

Arrangement fee: flat charge at the front-end of the operation applied on the total amount of the loan. At most Spanish banks this fee is set at 1.50% of the amount of the loan.

Survey Expenses: expenses passed on to you by the authorized surveyors, for which you will be issued with the corresponding invoice.

Fire Insurance: Set according to the Official Tariff - by way of example, this may vary between 0.025% and 0.042% of the price of the property, every year, depending on the type of location and type of construction.

What is subrogation?

This is when you move your mortgage from one financial institution to another, changing the interest rate and maintaining the same conditions regarding the term of the operation and the amount outstanding.

How do I request a subrogation? What do I have to do?

You can go to any branch of your bank where they will inform you of their offer for loan subrogations.
Once you have submitted the necessary documents, the bank will give you their binding offer. if you accept it, they will notify the bank at which you have your mortgage. That bank must then, within no more than 7 calendar days, certify the exact amount of the mortgage outstanding. Within a minimum period of 15 days after receiving the certificate, the deed of subrogation will be signed and your mortgage will be moved to the new bank.

What is a novation?

This consists of changing the current conditions of your mortgage at the same financial institution. In addition to the interest rate, you can also change the term (lengthening or shortening it) and the amount outstanding.

How can I request a novation?

Go to your bank and ask to improve the terms of your loan, in order to adjust them to those prevailing on the mortgage market.

If you need further information, please do not hesitate to contact us and we will make an appointment for you to meet with a local bank or mortgage broker who will make a personalized study of your situation and guide you on the best way forward.

For security reasons it is recommended your personal financial information should only be provided directly to the bank..