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The Buying Process
In short we will explain to you the process when you decide to buy a property in spain... Builder/ Promoter
Once you have decided to buy the property of your dreams, we take you to the office of the builder/promoter to do two things. First: to pay the so called "deposit", normally 3000 euros or 2000 pounds, (paid by cash, cheque or credit card), to take the property off the market. Second: to sign the so called "intention to buy"-contract. In fact, this is an official contract between the buyer (you) and the builder/promoter, in which the buyer confirms that he wants to buy the property from the builder/promoter. In this contract you wil find all the details of the property and a paying schedule.
The real "buying contract" (the deed), will be signed at the notary at completion! In the meantime, the property remains the responsability of the builder/promoter.
Solicitor
After this, we take you to an independent solicitor, who will check the "Intention to buy"-contract on several legal aspects. He or she will inform you about all their services. They will arrange getting a NIE-number for you. (This is an identification number for non-residents in Spain and is obliged by law!) You need this number at the notary on completion, when you sign the deed!
They can also take care of your taxpayments over your Spanish property, for example anual real estate tax (0,2 % of the groundbook prize), etc. As a non-resident you are obliged to have a financial representative in Spain by law anyway!
They can arrange a Spanish will for your property in Spain. (Very advisable). Although your UK-will is valid in Spain, it will be a big advantage to have a Spanish will as well, based on the Spanish law. It will make things a lot less complicated when something might happen!
They will lead you through the whole buying process very smoothly and without any risks. For example, they take care of changing the water-, electricity- and gasconnections and bills into your name!
On completion, they will check the property with you before signing the deed and they will accompany you to the notary and they will explain and translate the deed to you.
Bank
The next step (when you need a mortgage), is to take you to a recommendable Spanish bank, the Bancaja, where you can get information about a Spanish mortgage on your property. They will explain to you what they need on information from you, to do so.
We also open a Spanish bank account in your name, which you need anyway to pay water-, electricity- and gasbills. Mortgages
For non-residents (that means, if you are still living and working in the UK) and use your property for holidays or investment (letting), you normally can get a mortgage up to 80% of the survey taxation of the property for up to 40 years, untill your 75th year of age! Residents normally get a higher %, up to 90-95%.
The interest rate is quite interesting: 3.85%, much cheaper then in the UK!
Although this rate fluctuates, it is allready quite stabile on this figure for at least the last ten years!
What you need to apply for a mortgage:
Employed:
- Copies of your passports.
- Last three payslips.
- Last P60.
- Other proof of income.
Self employed:
- Copies of your passports.
- Last available Income Tax Return.
- Payments on account of income Tax for the current year.
- Other proof of income.
If you have questions about a mortgage with the Bancaja, please call Michel, the bank manager, at 0034 - 696 841 460 (he speaks perfectly English).
New Property:
To pay the first payment, which can be 30, 40 or 50% of the purchase prize, you will have to arrange this amount from the UK. You can do this for example buy using the free equity of your home in the UK.
The last payment, which is 70, 60 or 50% (minus the 3000 euros deposit), you pay at the notary when you sign the deed!
(Sometimes there is an extra payment necessary between the first payment and completion, especially when the building time takes a bit longer. The schedule could then be 25% by closing the roof and 25% on completion!)
After the property is finished you can still arrange a 80% mortgage in Spain. This means, that, for example, if you had to pay 50% as a first payment and used money out of your free equity from your home in the UK, you can pay 30% back on your UK mortgage! (Was 50%, but you have 80% in Spain, so you can put 30% back!)
Resale property:
With a resale property the figures of a mortgage are identical, the only difference is, that you normally complete within 2 months after signing the "Intention to buy"-contract. This is always negotiable!
The payments normally are as follows; the deposit is also 3000€ and has to be paid with the signing the "Intention to buy"-contract.
The rest, purchase price - 3000€ deposit, you need to pay at the notary when you sign the deed!
This could be 80% mortgage from your Spanish bank and 20% from the UK (cash or use of equity). Transferring the money from the UK to Spain
If you transfer money from the UK to Spain through your normal local bank, the "route" is as follows; your local bank transfers to the National Bank of England, they transfer it to the National Bank of Spain, then they transfer it into your private Spanish bank account or any other account you give them, for example the account of the builder/promoter, for the first payment.
The thing is though, they all take their commissions of the amount of money that is transferred! This means that, if you transfer for example 10.000 euros, only 9.800 will arrive in the account of your choise! This is lost money and it can also cause a problem when you have to pay your first payment into the account of the builder/promoter, because they need the fixed amount agreed in the contract. If less money arrives then agreed, they will react by sending an e-mail or letter, saying the amount is not right!
You can save yourself a lot of money and trouble by using one of the currency transfer companies as there are; Global Currency Exchange Network or Currencies Direct.
They will advise you and, if you wish, arrange a contract with you to transfer the money for you. They do this at a higher exchange rate and (much more important) with no costs involved.
The costs
The costs, involved in buying a property in Spain, are normally:
7% VAT over the purchase price!
2,8 % over the purchase price, being the costs for the registration, stampduties, notary etc. This figure depends on the price of the property and what is registered in the deed.
If you need a mortgage this will be a little bit higher, due to the fact that with a mortgage, you will have to sign 2 deeds at the notary, with the corresponding costs.
So, if you calculate roughly a 10% on top of the purchase price, you have a good indication of the total costs! Furniture
The next, nice step, is to get furniture for your new home to create your individual atmosphere!
There are good furniture shops around, to help you with advice. styles, etc. Insurance
A very important next step is to insure your new home, interior, car, etc.
There are good companies, who can advise you in this! Rentals
If you bought your property for investment reasons, it is advisable to go to a very reliable rental company, where they can advise you what is needed to let your property and what income you can expect!
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