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Mortgages in
Spain
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 between
13% and 14% 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.
To find out more please contact Jeremy Ryan at Evergreen
Mortgages. Tel: From Spain (+34) 951 311 764 - From UK (+44)
0871 395 1764 - Email:
info@evergreen-spain.com.
Banks of Spain
DON’T BANK ON
IT
Save up to €45 a month
Mike Walsh
The widening gulf between the pound sterling and the euro causes
distress to many ex-pats, holiday makers, and of course those
re-locating to euro-land. The more prudent among them transfer
pensions and other income via currency exchange dealers like
Excel Currencies, HiFX, Currencies Direct. The choice is yours;
there are differences but they are cost effective alternatives
to your bank. Use a dealership that is transparent about costs
and guaranteed exchange rates.
Not so long ago anyone living on a British pension, even a state
pension, enjoyed such an advantage many never bothered to pay
attention to detail. Similarly those who for a variety of
reasons transferred other income from the UK to Spain. However,
because of the widening rates it is now more important than ever
to count the pennies; complacency being the road to penury.
WHY PAY SOMETHING FOR NOTHING?
Currency transfer dealers came about because they knew banks
charged for a service that cost them nothing: you pay for a
computerised transfer which is virtually free of cost and which
should be part of the service. A bit like your accountant adding
a hefty surcharge for your use of their reception area. Why not
drive these money-changers out of your temple?
Money going to Spain is more or less a one-way street. Pensions,
private and state are pretty much obvious. Don’t make the
mistake of thinking, as many do, that the amount transferred is
so small the savings would be negligible. Banks make a
disproportionate profit from the money transfer minnows.
Remember too that it is quite irrelevant as to the whether
transfer payments are regular or irregular (in the legal sense
of the word).
WHAT WOULD YOU DO WITH £35 A MONTH?
UK banks can be cumbersome and expensive when it comes to
transferring funds overseas. Their commission and charges can
add an extra £35 a month to your transfer costs. Another
disadvantage: many local branches have staff with little or no
experience of international transfers. Their mistakes can cause
delays and cost you money.
Finally the funds may go through several links in a chain: from
local branch to destination branch. Each link increases the
chances of your funds being delayed or even going astray,
resulting in late payment charges and an unforced overdraft
which can affect your personal credit.
By using the RIT (Regular International Transfer) method the
difference can be enough to cover your energy bills all year
round. Still think it isn’t worth bothering about?
There are of course cash transfers other than pensions. You may
have other forms of income. The returns from property you sold
or rent out in the UK. Profits from an on-going business or
partnership; an inheritance, an allowance such as a children
helping you out by making regular (or irregular) payments to
your account.
DO WHAT THE SUPRA RICH DO
If for any reason you have money being transferred to your euro-land
account it can pay substantial dividends to avoid the banks. It
all adds up to a faster money saving service. If the supra rich
avoid the high street banks they do so for a reason. Perhaps you
should take a gold leaf out of their ledgers.
Setting up an RIT is so easy you may kick yourself for not doing
it sooner. You register, which is so straightforward a child
could do it. Usual name, address; photocopy of passport and
utility bill. This is faxed or posted to the currency exchange
dealer (all are tightly regulated by the way).
Your
complementary bank account is set up within minutes, and costs
you nothing. You will be assigned your own personal ‘manager’
who will take the details of the financial transfers: the source,
regularity (or one-off) and of course the bank abroad to which
it is being transferred.
Is there anything else you need do? Yes, my suggestion is that
you take your dearly beloved out for a nice restaurant meal,
including wine. Our advertising section offers an excellent
choice. This will more than likely take care of your first
month’s saving. Bet you are glad you thought of it. Good luck.
Daring to engage readers in the challenging periodicals of
Mediterranean Spain and the UK
Michael Walsh McLaughlin. Free Spirited Team Player
The Editors' Choice
quite_write@yahoo.co.uk
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