Finance

As a prospective overseas property buyer it is a good idea to understand the most important financial and legal elements of your purchase, which will influence your present and future financial situation.
Apart from the total purchase cost there are other factors to consider such as yearly taxes, interest rates or community fees. Below you can find a short introduction to the most important financial and legal elements of buying a property. For any further or more detailed info on any point please contact us

Finance:
1. Mortgage Loan
If you need a loan to finance the purchase of a property in Spain you have first of all to decide whether you want finance from a Spanish bank or from a bank in your own country. There are different factors that can influences this option like; where you are going to live and work, where you have your savings, interest rates, exchange rate fluctuations, fiscal advantages of obtaining the loan in different countries, etc.
Spanish banks generally offer loans up to 70% of a property´s purchase price to non-resident buyers, subject to status. (Typically the last 2 years of accounts are requested for self-employed candidates and the last 3 months of salary slips and bank statementsalong with a valid work contract for employed candidates)

2. Currency exchange
The currency exchange market is volatile and even the slightest change can mean the difference to you of a few thousand euros when buying your new home. Likewise if you opt for a Spanish mortgage you may be looking at regular exchanges and transfers to meet your monthly payments. Specialist currency exchange companies, such as AxiaFx, Sterling Exchange etc., offer vastly improved exchange rates than those of the high street banks and also include the international transfer charges.

3. Spanish bank account
Opening a Spanish non-resident account will facilitate the purchase of your property. It can be used initially to transfer the funds for the purchase and subsequently direct debits can be set up to pay for your electricity, water, community fees etc.

4. Home insurance
We highly recommend that every home buyer contracts a comprehensive home insurance policy from the day you purchase your property. Policies are readily available from all major insurance companies and your high street banks.

Legals:
When purchasing a property in Spain the buyer must pay the following taxes and fees:

1. Property tax. (a)If purchasing a new property, then I.G.I.C. is the appropriate tax to be paid, which currently is at 7% of the declared purchase price.
(b) If purchasing a resale property the applicable tax to be paid is called I.T.P. , which is a transfer tax. Currently this tax is 6,5% of the declared purchase price.
In the scenario of a resale purchase an additional tax called A.J.D. (a documentation tax) also has to be paid. This is 0.75% of the declared purchase price.
2. Notary fees: In Spain the purchase transaction happens in front of a notario (notary), who is a public official who is required to ensure that property transactions are carried out correctly (legally). The Spanish government set the notario’s fees and these are payable according to the declared value of the property and also the number of clauses contained in the deeds. The fees may be from 0.1 per cent to 0.4 per cent of the declared value, the lower amount for more expensive properties and the higher for those of smaller value. In addition, if you have obtained a Spanish mortgage on the property you will also be required to pay the notario’s fees for the mortgage deeds.
3. Land registry fees: The land registry in Spain is responsible for the paying of all taxes due, transferring the property ownership, and agreeing the transfer has been undertaken correctly. The process of registration can take up to three months and it is only after the Land Registry has approved the transaction that the paperwork and original deeds will be issued. The fees are dependent on the value of the property, but in general are between 300-500 euros for most properties.
4. Lawyer´s fees: Your lawyer is the person who makes all the legal checks on the property to ensure on the day of purchase that there are no ´surprises´ and that the property is free from all outstanding debts and encumbrances. Also your lawyer will assist in obtaining the necessary N.I.E. (national insurance number for a foreigner) certificates essential for all buyers. Typical fees are around 1,500 euros for a comprehensive service.
5. * Spanish mortgage costs: If you obtain a Spanish mortgage there will be an extra notary and land registry deed to pay for, along with the commissions charges by the bank for the loan. The banks will detail these costs to you on loan approval.

After purchase costs and fees:
1. I.B.I. : This is a yearly tax imposed by the town hall and evaluated on the ´catastral value´ of your property.
2. Community fees: If you are part of a community you are obliged to pay a monthly fee which covers maintenance costs etc.
3. Water and electricity: Whilst a few communities have these charges all inclusive in the community fee, most residences have separate meters for water and electricity consumption which is paid individually as per consumption.
4. House insurance: Always advisable to contract a policy from the day of purchase. Most banks and insurance companies offer standard policies against fire, theft etc.
5. Bank charges: For non-residents there are usually maintenance charges (which vary from bank to bank) for having an account and an annual non-resident tax of a few euros to be paid
6. Non-resident income tax declaration: A yearly declaration detailing incomes in Spain or not! Your lawyer or accountant will advise you about this.
For further information on any of the above please contact us
Prior to purchase, each Nespera Homes client is informed and provided with an accurate breakdown of all costs, relating to their specific property, detailing all applicable and probable costs and fees relating to the purchase and future maintenance.