Financial Advice

Cash purchases – Cash is king!

This is normally helpful in order to obtain a better and faster negotiation to buy your desired property and to avoid the process of asking for a mortgage, however, many buyers do prefer to get the mortgage.

Mortgage in Spain

Nowadays you can get loans of up to 60 to 80 % of the property value. In some cases, properties from the banks can provide up to even 95 % of the property value. In these cases it is very recommendable to read all the small letters.

Some developers do also facilitate funding options which can help you out with your purchase.

The maximum term for a Spanish property mortgage normally is 30 years covering 70 0r 75 % of the property valuation. Since there are many different mortgage options, the best thing to do is to get advice from an international mortgage broker. This way you will feel more comfortable with an "almost taylor made mortgage".

The requirements for a Spanish Mortgage are:

  • Resident Certificate (Escanda Properties can help you with this)
  • Six months personal bank statements showing declared income and outstandings.
  • Latest tax return.
  • If self-employed, audited accounts for the last two years.
  • Last two years tax returns and a letter from your accountant confirming your income.
  • Proof of any other sources of income that you may wish to borrow against.
  • Copy of any tenancy agreements on buy to let properties.
  • Details of any pension you may be receiving.

The process to obtain your mortgage approval should normally take 2 or 3 weeks if the loan amount is not too big. If it’s a big loan, the local bank will require its Head Office approval and this could add about 3 or 4 weeks more. Whether you are buying a Marbella or Spanish villa, apartment, etc, the process to get your property keys would normally take 6 or 8 weeks, including contracting, lawyer, mortgage and notary.

Escanda Properties can help you during all this process, providing all necessary guidance and contacts.

Taxes

This is not a fixed issue and each case should have its unique advice but we provide you basic guidance on taxes and other costs involved:

Transfer Tax (I.T.P.) 8%, 9% or 10% Buyer pays for it provided the vendor is not a developer or normally trading in the business of resale properties. If the "minimum fiscal value" of the property, as per the Regional Government, is greater than the price, then the minimum fiscal valuation applies: 8% is applicable up to the amount of 400,000€ or 30,000€ in the case of garages except those belonging to the dwelling and with a maximum of two; 9% is applicable to the amount between 400,000€ and 700,000€ or between 30,000€ and 50,000€ for garages; 10% is applicable to the amount exceeding 700,000€ or 50,000€ for garages.
VAT and Stamp Duty 10% + 1.5% For any villa, apartment, or garage that is annexed to an apartment or villa, where the vendor is a developer, promoter or habitual trader for brand- new properties.
VAT and Stamp Duty 21% + 1.5% For the first sale or resale of plots of land, and only for the first sale of brand-new commercial premises where the vendor is a developer, promoter or habitual trader or a company.
VAT and Stamp Duty or Transfer Tax (I.T.P.) 21% (villa/apartment)
+ 2% (comm. Premises)
or Scaled 8%, 9% 10%
In resales of any villa, apartment or commercial premises, where the vendor is a company, developer, promoter or habitual trader and the purchaser is a company that will apply or use the property for the development of its activity, they can chose between paying VAT (that can be deduced with the normal activity of the company) and 2% of stamp duty or Transfer Tax.
Notary and Property Registry Fees 3.000€ The cost increases according to the number of pages or complexity of the title deed, and value of the property.
Municipal Added Vaule Tax (Plus Valía)   The Plus Valía tax (described earlier) can be as little as a few hundred Euros or as much as many thousands of Euros on a property with a lot of land that hasn’t changed hands in many years. This tax corresponds, by its nature, to the vendor who is responsible for its payment, unless otherwise negotiated.
Lawyers Fees 1% Appox. Lawyer's fees are in the order of 1% of the selling price, more or less, depending on the lawyer and the price of the property.