the purchase process guide

step by step process to buy in Spain

Buying in Spain? This guide will walk you through each step and answer many of your questions.

step one mortgage application

Mortgage
Mortgage

Apply for a mortgage

Maximum 70% if you pay tax outside of Spain
Maximum 80% for Spanish taxpayers (70% on second homes)

The value of the loan will be based on the property valuation or the property price, whichever is lower.

Mortgage
Mortgage

Documents required

  • Copies of your Passport / NIE (for all parties that will be on the mortgage)
  • Your most recent tax declaration or P60
  • Your last three payslips
  • Details of other properties you own including any potential rental income
  • A bank statement of the last 6 month
  • An Experian credit report
Mortgage
Mortgage

Who can apply?

Anybody can apply for a loan in Spain over the age of 18, regardless of where you earn your income, pay taxes or live.

The amount you can borrow depends on your income – debts. Most Spanish lenders will not lend money if your combined outgoings (mortgages & loans) add up to more than 40% of your total net (after-tax) income.

We have an in-house risk assessment team, that can help you understand what you can borrow. Get in touch here

Mortgage
Mortgage

What is considered income?

Banks in Spain will only accept income that can either be shown on a tax return or comes from earnings from a property with rental agreements in place.

step two property purchase

Reservation
Reservation

Removing property from the market

To reserve a property and take it off the market, you will need a lawyer to negotiate a contract with the agent or seller’s lawyer.

Foxes are a legal company and have in-house English & Spanish speaking lawyers who can negotiate the contract and ensure you are protected.

Reservation
Reservation

How much is a deposit?

Most agents will accept 3,000 Euros, although for properties over 300k they may ask for 1% of the purchase price?

 

Reservation
Reservation

Is the deposit refundable?

The following are reasons why a deposit would be refundable:

  • Subject to finance. You can include a clause that in the event you cannot purchase due to issues with a mortgage, the deposit can be refundable.
  • Valuation. If the valuation on the property is below the asking price, you can get a refund or negotiate the price.
  • Legalities. If there are any legal issues with the property, debts, licencing issues etc

Each of these clauses should be included in the reservation contract. If they are not included then your deposit may be at risk.

Reservation
Reservation

How long is the reservation process?

Generally, it will take 4 weeks to perform all the legal checks, complete the property valuation and ensure you have a firm mortgage offer in place.

The timescale to perform all these tasks will be negotiated and agreed in the reservation contract by your lawyer.

Valuation
Valuation

Property valuation

If you are purchasing the property with a mortgage then a valuation will need to be performed by a 3rd party company which the bank accepts.

The amount the bank lends will be based on the valuation, if it is lower than the purchase price.

Valuations can take between 7-14 days to complete, our team can request this on your behalf.

The purchase
The purchase

Contrato de Arras (Private Purchase Contract)

The Contrato de Arras is a private purchase contract between you and the property owner.

You will be required to pay 10% of the purchase price upon signing to the owner.

Once signed you and the owner are locked into the purchase.

If you do not complete on the purchase then you will lose the 10% and your original deposit. If the owner does not complete the sale, then depending on the contract terms you would receive a full refund + a further 10% or whatever was negotiated.

The purchase
The purchase

How long does the purchase take?

From start to finish a property purchase in Spain can be completed within 6-8 weeks.

However, there are many reasons why a purchase may take longer and every purchase is different.

Our advice would be to budget for around 12 weeks from start to finish.

The purchase
The purchase

What are legal checks?

  • Check the title/ownership of the property
  • Check that the property has all the relevant licences
  • Complete and/or check the private contract detailing the terms and conditions of the sale of the property
  • Complete purchase before a public notary, either on your behalf or with you in person (this may incur extra costs depending on location)
  • Register/Check cadastral
  • Check cadastral and land registry for any discrepancies
  • Tax Registration
  • Check for debts – community, utilities, townhall sanctions
The purchase
The purchase

Do I have to visit Spain?

No, if you have a legal representative with power of attorney they can be there for the signing of the purchase.

Property Purchase Responsibility Chart

Use the below chart to help you through your property purchase. At each step, one or more parties can be involved or will take responsibility.

Agent

Broker

Bank

Lawyer

Buyer

Property Viewings

Negotiations

Reservation

Due Diligence

Mortgage Offer

Valuation

l

Arras Contract

Binding Offer

Acta Previa

Purchase

NIE

Bank Account

l
l
l
l

    Responsibility

    Can be involved

    Can be involved (with power of attorney POA)

    l

    Signature required

    Not involved

    Property viewings

    The buyer identifies properties they would like to view and along with the agent will view those properties

    Negotiations

    Once you have identified the property you wish to purchase, inform the agent and agree a price. If the price is below the asking price, then your agent can help negotiate an agreement.

    Reservation

    Reserving a property takes the property off the market while you carry out legal checks and qualify for a mortgage if you need finance. A reservation contract should be negotiated by your lawyer to ensure your deposit is protected and you have enough time to complete the checks (due diligence and valuation) and qualify for the mortgage. Deposits range between 3,000 Euros and 1% of the purchase price.

    Due dilligence

    Due diligence is carried out by your lawyer. This involves checking the property is owned by the seller, has no debts and is legal.

    Mortgage offer

    This is known as an AIP, agreement in principle. The offer is based on your financial situation and the property you are buying.

    Valuation

    If you a buying with a mortgage the bank will require a valuation of the property. The Foxes mortgage team will liaise with the agent or owner of the property to organise an appointment for the valuer. Once the valuer has visited the property, it takes around 4-7 working days to receive the report.

    Arras contract

    The contract de Arras, or private purchase agreement is a private contract between the seller and the buyer where the sale is agreed. Once signed both are locked in to the purchase and can only pull out with a penalty. Your lawyer will negotiate this contract and if they have power of attorney, they can also sign on your behalf.

    This contract should not be signed until the due diligence has been completed, and the valuation and mortgage are in place.

    Binding offer

    The binding offer is presented by the bank, once signed your mortgage offer is binding. This document will only be issued after the valuation and close to the purchase.

    Acta previa

    This document needs to be signed in a notary by the buyer or their lawyer. The purpose of this document is to check the mortgage complies with the law and the buyer is fully aware of the conditions of the mortgage.

    Purchase

    The final purchase will be carried out in front of a Spanish notary. In most cases, the bank, seller, sellers lawyer, buyer and or their lawyer will need to present for the signing. Once signed the keys will be handed over to the new onwer.

    NIE

    An NIE or Número de Identificación de Extranjero is an identification number that any foreign person who is buying a property in Spain will need to request before they begin the purchase process. You can read more about applying here

    Bank account

    You will need to open a Spanish bank account prior to the purchase. Your broker or lawyer can help you liaise with a bank to do this online, however, you will need to visit a branch of the bank prior to the purchase and present your official documents.

    Ready to finance and buy your dream home in Spain? Start the process and see how Foxes can help you with your purchase

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