MORTGAGE AND BANKS IN SPAIN

Spanish property owners must have an account in Spain. After buying a property, non-residents can open the same type of accounts as residents. For opening an account, getting a loan or a mortgage you will need your passport or residence permit, and will be asked to fill out a form by the bank with the bank's general terms and conditions. You will also be asked for your N.I.F. or N.I.E. number, which can be obtained at the nearest police station with a foreigners department.

Types of Accounts

- Current Accounts. If you consider buying property in Spain or if you live in a spanish property, you will need to open a current account. These accounts have complete liquidity, allowing a property holder to make withdrawals and all types of standing orders (salary, pension, revenue from investments) and debit (rent payments, bills for water, gas or electricity, etc.). The opening of an account generally involves the charge of a small maintenance fee. You must make sure that you have sufficient funds to pay the standing orders or you may arrive at your new property to find essential services shut off for lack of payment (often requiring a reconnection fee!). A small maintenance fee is often charged.

- Deposits Accounts. The interest you will obtain depends on the time period of the deposit and the amount deposited by the property holder.

The interest rate offered is higher than other accounts (like currents or saving accounts). All these accounts may be opened in any currency quoted in Spain, as well as in Euros.

MORTGAGE IN SPAIN
Getting a mortgage is the financial way for those people who want to buy a property and don’t have the total amount of money of the purchasing price at the time of buying it. You should think if you want to take a mortgage in Spain or a mortgage from your country depending on whether you are a resident or non-resident. Residents or non-residents, when buying property in Spain may take out a mortgage, in any currency from any bank in the world. Many banks and building societies will offer you a mortgage with attractive conditions and most of them are member of The “Asociación Hipotecaria Española” (Spanish Mortgage Association). A mortgage must be formalized in a public deed of mortgage in presence of a Public Notary and registered in the Property Registry. A non-registered mortgage is, in legal terms, no more than an ordinary loan to people buying property in Spain, leaving the bank with a personal action against the borrower in case of default, as opposed to a real action if it were registered.

. General information on a few points:

• A mortgage is available to buy any type of residential property, apartment, townhouse, large villa, finca (country estate) or new development;
• The mortgage process takes less than a month;
• When you’re buying property in Spain a condition of your mortgageis the property insurance. Take insurance for your Spanish property through an approved insurance company and life insurance is sometimes compulsory;
• Redemption penalties (known in Spain as early repayment commissions) are applied by almost all banks, between 0,5 - 1,5%;
• Your monthly payments for your mortgage should not exceed one-third of your proven net income;
• The repayment period of your mortgage is between 10-30 years. Resident may take a longer period as a non-resident for the spanish mortgage repayment;
• The bank will appoint an expert in property appraisals to carry out a survey for mortgage purposes, and they inform about the cost of the property appraisal before the valuation is undertaken. The fee for the property valuation is usually 275 euros but obviously the price varies according to the size of the property.

Documents to request a mortgage:

Employees
 1. Last 3 payslips
 2. Last tax declaration (P60 if from the UK)
 3. Filled out application forms for the mortgage
 4. Photocopy of Passport
 5. Copy of Title deed of your property from Property Register (Nota simple)

Self-employed
 1. Tax returns last two years
2. VAT and income tax returns 3. Balance sheets
4. Last 3 bank statements
5. Filled out application forms for the mortgage 6. Photocopy of Passport
7. Copy of Title deed of your property from Property Register (Nota simple)


Mortgage interest rates

Fixed interest rate mortgage:
The interest rate is fixed when you take the mortgage. The monthly repayment amount and interest charge for your property will be the same during the repayment period of your mortgage, regardless of the increment or reduction of the interest rate market. The advantage is that you will always pay the same amount independently of the interest rates, market fluctuation, and you will not be able to pay less if the interest rate falls. Buying property in Spain with fixed rate usually involves shorter periods of repayment, around 12 years and the commission for early repayment is higher.

Variable interest rate mortgage:
Contrary to the fixed rate mortgage,the variable interest mortgage involves variation of the repayment interest rate for your property in Spain. The annual interest rate will be adjusted up or down according to the interest level.

People can choose the index that best suits their needs, EURIBOR or IRPH (Indice de Referencia de Prestamos Hipotecarios) of banks and building societies in Spain.

Interest rates change with the market, a longer repayment period, up to twenty or thirty years and the commission for early repayment of your Spanish mortgage is usually 1%

COST AND LEGAL FEES OF YOUR PROPERTY

• Valuation fees: Cost of valuation of the property, is usually 0.1% of the property value.
• Opening commission of your mortgage: 1%will be charged by the bank to your current bank account.
• Notary and property registry fees: 0.5% of the mortgage amount. These taxes and fees are in addition to the costs involved in buying the Spanish property.
• Taxes:
• Stamp duty, 1,8 % of the mortgage amount.
• Transfer tax, if you are buying a second handSpanish property, and depends on the province in which you are buying (6% or 7%).
• IVA (VAT): If you are buying a new builtproperty. Usually is 7% of the value executed by deed.
• Lawyer fee: 1% of the Spanish property price.
• Property insurance: the insurance fee for your property must be paid at the moment of the deed signature.