Ten Step Guide to Buying
1. Sort your budget: First things first, you have to know how much you can feasibly spend on purchasing your new Spanish property and how much you want to spend.
2. How will you pay? There are a number of options when it comes to paying for your house:
◦ One-off payment: Paying the total sale price of the property outright to the seller, normally by way of an electronic bank transfer or bankers cheque in their name that you hand over when you sign the property deed at the Notary office.
◦ Mortgage. Getting a mortgage, either the bank in Spain or at home, using the property itself as a guarantee against defaulting. Depending on how old you are and certain other circumstances, payment terms can be up to 40 years, with banks normally offering to loan 60% of the value of the house and the remaining 40% being paid from the buyer’s pocket.
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3. Decide what type of property you want and where, be it a new construction or second-hand, free or protected, on the seafront or in a city. You should choose the one that best suits your needs and personal situation. Drive around the area you have chosen, see which villages or Towns you like best then approach a good estate agent to find something in the vicinity.
4. Choose a seller. Once you’ve decided where to buy and how much to spend, your search will be so much more focussed and productive. Remember that negotiating the price and sale conditions depend on the type of seller, so choose wisely between a private seller or a real estate agency because each have their own pros and cons. It’s a mistake people often make using a “local” from a bar thinking you’re saving agents fees, often they are charging more than an agent your just not aware of the deal between them and the vendor. It’s probable the legal paperwork won’t have been checked out by a lawyer or gestor, meaning you could waste hundreds on a solicitor to be told the house isn’t legal and have to start your search again
5. Visit the property, talk to the neighbours and inspect the place top to toe. When you go to visit a place, take notes, check measurements and take photos of anything that takes your fancy. Take in the distribution of the space and the rooms, which direction the property faces, how much light and ventilation there is, the state of the fixed installations, the wiring and the energy performance, how much noise there is and what else is around in the neighbourhood… in short, be thorough in your first visit to see a house!
6. Make an offer (they can’t refuse):
◦ Make sure you’ve got your financing or a mortgage arranged and in place to be in a strong position to make that offer.
◦ Look over the property once more, just to be sure, before making your offer.
7. Sign the deposit agreement (contrato de arras). This is the first contract that is normally signed and it’s a kind of preliminary safeguard for the rights of both the buyer and the seller, assuring both will enter into the sale agreement. When you sign, you’ll have to pay a 10% deposit on the house, and with this you take on all the rights and responsibilities of a buyer. If you as the buyer later decide not to go through with the transaction, you will lose this deposit but if the seller cancels the sale to you, they will have to return double the deposit to you.
8. Sign the title deed. This part of the buying process must be done in front of a notary with both the buyer and seller present. The deed must contain a description of the property as well as explaining any mortgages or charges on the house, the final sale price agreed and how it will be paid, plus the taxes and expenses related to the sale. This is also a great chance to check that all the documents are present and correct, like the Energy Performance Certificate, insurance if applicable, and invoices for the latest tax and community cost payments.
9. Pay the transaction costs and taxes. The main expenses to be paid when buying a home in Spain are the ITP property Transfer Tax and VAT taxes, notary costs, the payment to register your name on the Property Register and any costs related to the mortgage. Budget for your overall buying costs, this can be between 12% and 13%. Broken down by 8% ITP (stamp duty), 2% estate agent fees plus IVA (vat) 1% plus Iva for a lawyer plus IVA (vat) then a share of the Notary costs and the Property Registry.
10. Pick up the keys and move in to your new home!
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