The purchase process
With Sunseeker Homes, buying a property in Spain is a straight forward, easy and transparent process. From our offices in the UK and Spain, we will provide you with professional help and guidance at all stages of the process:
Stage 1: Reservation deposit
Once you have decided to purchase a property you will need to make a reservation deposit. This is usually about 3,000–5,000€ depending on the development or property in question. This can be made by credit card payment or bank transfer. Once this sum is paid the property is taken of the market and the price is frozen.
Step 2: Obtaining a mortgage
If you are buying an off plan property the developer in question may be able to offer you a mortgage with favourable terms.
You can also raise finance in your country of origin via your own bank or by releasing equity. We can provide you with the best advice regarding this option.
If you require a Spanish mortgage, we work in conjunction with independent mortgage brokers who will help you with all the necessary paperwork required and source the best mortgage to suit your personal circumstances. Terms and conditions can vary from lender to lender but as a non resident you can usually borrow up to 80% of the property price over a 10 to 30 year period depending on your age. It is important to bear in mind that taxes and costs amount to approximately 10% of the property purchase price in Spain, so you will need to budget accordingly.
Step 3: Instructing a Lawyer
Once you have paid the initial deposit you will need to hire the services of a Spanish lawyer. The lawyer will then carry out numerous checks to ensure that your chosen property is owned by the person selling, all the correct licences are in place, there are no outstanding debts on the property and that all community fees and taxes are paid up to date.
Similarly with the purchase of an off-plan property the lawyer will check that the developer has an insurance policy or bank guarantee in place which means that if the developer defaults on the purchase, you will receive a refund plus interest of the money. Typically a lawyer will charge 1% – 2% of the purchase price of your property plus VAT at 16% for his services during the sale process.
You can also assign Power of Attorney to your lawyer which means that he can sign for the property on your behalf. This is convenient if you cannot or do not wish to travel to Spain at this time.
We work with independent lawyers in Spain and can recommend the services of professional English speaking lawyers if you wish.
Step 4: Exchange of Private Purchase Contracts
Once your lawyer has confirmed that all the necessary property checks have been made, then you will sign the Private Purchase Contract with the vendor of the property. This contract states the legal description of the property, the price, payment terms and both parties’ obligations.
This contract is generally signed two weeks after the initial reservation deposit has been made. Prior to signing the private purchase contract you should have a mortgage agreement in principal with your lender, as you will now have to pay 10% of the agreed property price.
If you are buying an off-plan property then this sum could be 30% - 40%.
If after signing the Private Purchase agreement you are then unable to proceed with the purchase, the monies paid at this stage are non refundable. If the vendor decides not to proceed with the sale you should receive a refund of double this deposit or in the case of off-plan properties your deposit plus 6% interest.
Step 5: Signing at the Notary
This is the final stage of your purchase and it is formally completed before a Public Notary. Here the vendor will sign the property over to you and you will exchange the final payment for keys to your new home.
Fees payable include 7% transfer tax or 7% VAT plus 1% Stamp Duty if you are buying from a promoter or developer as well as the notary fees which range from 300 – 1.500€ depending on the price of your property and fees to register the property.
The vendor usually pays a tax called Plus Valia, however it may have been stipulated that you are responsible for all costs as a condition of the sale. This tax may range from a few hundred to several thousand euros. Your lawyer should find out how much this tax is likely to be before you agree to pay it.