The lending market in Spain is as competitive as any in Europe with banks competing for business and many having realised the benefits of servicing the Expatriate buyers of property as well as their own nationals.
There are two main interest rates that borrowing is linked to. The most common is a margin over the European Interbank Offered rate or EURIBOR published by the European Central Bank although some banks also offer mortgages at a margin over the índice de Referencía de Prestamos Hipotecarios (conjunto de entidades) or as it is thankfully more commonly referred to IRPHce. This second interest rate is an average rate for mortgage of all the Spanish banks and is published by the Banco de España. Through a range of different lenders it is possible to obtain variable rate mortgages, interest only mortgages, fixed rate mortgages or sometimes a combination. Each lender will have different criteria and some require different documentation from clients to assess whether they will provide funding. It is not possible to detail each lenders product range as it often changes so please ask us for what is currently available. We constantly review the lenders we use and the products available from them to ensure the whole process is as efficient as possible and that we have a range of products to meet our customers’ requirements. Fees and taxes on Property Purchases When a property changes ownership there is a legal process that is gone through and the following costs should be borne in mind when buying a property in Spain. If buying a new build property then there will be a charge of 7% IVA (VAT) on the total price. In addition there will be stamp duty of up to 1% If buying what is known as a re-sale property (second-hand) you will need to pay a transfer tax called Impuesto de Transmisiones Patrimoniales (ITP). This is around 7% of the sales price. For all properties there is also a fee of 0.5% AJD (Impuesto de Actos Jurídicos Documentados) to pay at the notary. You will also be required to pay the Notario (Notary) fees when you sign the deed for the property. They are fixed on an official scale and vary depending on the property.
Payment of the Registro de la propiedad (Property Registry) enables the property to be transferred into your name.
You must also have an NIE number if you are non-resident(s) which is obtained from the local police station. You have to make the initial application in person and as such this should be started as soon as possible after deciding on your property purchase. It can take several weeks to come through. However, most banks do not require this number before they start processing a mortgage for you but will require it before providing the mortgage. You can grant your lawyer a power of attorney to pick up the number on your behalf if you are not in Spain when it becomes available. Fees and taxes relating to a Spanish mortgage All mortgages in Spain incur a series of costs. Some are related to the banks provision of a mortgage facility and other are related to taxes and registry costs which vary slightly from area to area but will be payable regardless of which lender you take a mortgage with. All banks will require a valuation (Tasación) on the property you are buying to decide whether it is suitable for mortgage purposes. The costs vary from one lender to another but in the overall picture the difference is unlikely to be the overriding factor as to which lender you choose. Some work on a flat fee for valuations up to so much and then another flat fee whilst other work on an estimate with the final cost being calculated once the valuation has been completed. However, it is invariably not far out from the banks estimate. Typically the fee will be between €280 and €500. You will need to pay the banks opening commission. This is normally between 1% and 2% of the loan amount and depends on which lender you choose. Along with the property purchase the mortgage is deemed a public contract and as such requires public certification. Therefore, it is subject to a transfer tax called Actos Juridicos
Documentados (AJD) which is regulated by law and paid at the notary when the mortgage is drawn down. Typically this is 0.5% of the amount of the mortgage being taken. There are also fees to pay the notary and land registry which again are regulated by law. These can vary from region to region in Spain and you should check with your lawyer. Finally, all banks will require you to take some form of buildings insurance which obviously protects their loan should, for example, the building be destroyed by fire. However, not all banks offer competitive insurances and some will only protect their own interest in the property. On some specific deals banks will try and sell their own insurance, however, in most cases you can select your own company as long as it meets the banks own minimum criteria and their interest in the policy is noted by the insurance company. You may wish to add contents insurance and third party liability all on the same policy. All in all we would recommend that if you are buying a property and requesting mortgage funding then you should allow 12% on top of the purchase price to cover the taxes and registration costs of the property and the opening commissions, registration costs and taxes of the mortgage. You do not need to worry about how to pay these fees as the lawyer and the banks will ensure the notary and taxes are paid and normally take the amount from the gross mortgage they are looking to provide to ensure they are covered.
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