New Home with Sabadell New Horizons in Spain The Sabadell guide to home - buying in Spain
Introduction
Introduction As we are Expatriate Banking experts, we can meet your needs and address whatever query that may arise regarding the process of applying for a mortgage. For all issues linked to the property purchase you just need to contact us, either by enquiring at your local branch or by contacting your international specialists on the following telephone number, + 34 902 627 267 or by email, sep@bancsabadell.com.
Living in a new country, with a different language and local way of life may be a big challenge and because we understand how difficult and challenging this process can be, we will ensure that you have what you need in order to help you settle in and make your new life much easier. Within all of these new life steps, buying a property in Spain can sometimes be a complicated process. We, Sabadell, would like to help you through the whole process. We have the local knowledge and speak your language and we are aware of the issues and challenges posed by this new opportunity in your life. This is why we have published this guide.
And of course, you can also enter our website www.bancsabadell.com where besides finding all the information on our mortgages, you will be able to fill in an application form so that our experts can analyse your purchase operation within 48 hours with no commitment on your part and completely free of charge. This service can save you time whilst overseas, searching for a suitable property and can prove very useful when negotiating with vendors. Whether you already have a property in mind, or would just like to know how much you can borrow before you start looking, we will be happy to discuss how our range of mortgages can be tailored to fit your individual requirements.
Whether you need a mortgage or not: we can provide expert advice on all the steps to be taken and the professionals to be contacted, so that your time in Spain is spent enjoying your home and not chasing up bureaucracy issues. With Banco Sabadell, the purchase of your home becomes as easy and trouble-free as possible. You can rely on our proven experience in the real estate and mortgage business, which enables us to find the solution that best suits your needs and above all will help to avoid unnecessary costs which can so often arise.
Finally, we can also help you to find the house of your dreams in Spain through Solvia, our very own Real Estate Agency, with a property portfolio that is full of excellent opportunities for your new life in Spain.
In this guide, you will find a clear and simple summary of all the details related to purchasing and financing your home in Spain and will help you to take out a mortgage in the safest way and without any unpleasant surprises. Furthermore, you will find a glossary of financial terms in Spanish with their English translation (found at the end of this guide), which will help you to understand the meaning of concepts which can often lead to doubts.
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General recommendations before buying a home in Spain.
General recommendations before buying a home in Spain. The most difficult part of purchasing a property is probably choosing the right and most convenient home for you. There are lots of good options in Spain and we strongly recommend you to take your time when looking around. You should compare the different options the market offers, inspect in detail all the property’s physical characteristics and determine the property’s legal situation. Once your property has been chosen and you have made sure all the right steps have been taken, normally the buyer and the seller sign a private purchase agreement including all the conditions of the property purchase (price, terms, etc…). The general rule is that the property purchase agreements are completed in a public deed, which is a public document authorized by a Notary, who certifies the legal issues of the transaction as agreed by the parties.
Before completing the public deed:
If you decide to take out a mortgage with Banco Sabadell, we will take care of all of these things for you, so you won’t have to worry about anything. It’s simple as that.
• We highly recommend you hire a Surveyor to verify the adequacy of the purchase price.
On the other hand, in Spain, you are not legally required to appoint a Solicitor when buying a property as the sale is formally completed when the public title deeds of the property are signed in front of a Notary Public, the final payment has been made, and the property has been registered in the name of the buyer.
• Always ensure that the property is exempt from mortgages or outstanding debts. Make an enquiry at your local Property Registry (Registro de la Propiedad) to find out. • In order to make sure that your property won’t be affected by any public or private Building Projects, contact the Town Planning Department (Departamento de Urbanismo) of the Local Council (Ayuntamiento).
It is however common practice here in Spain for the vendor to ask for a deposit of approximately 10 per cent of the property purchase price - often in addition to the reservation fee - so we would recommend that you appoint a legal firm to represent you in the transaction. They will also provide you with any legal advice required.
• The former owner of the property should be up to date on the Property and Capital Gains Tax payments, as well as on payments for basic utilities (water, electricity, telephone, etc.) and the owners´ community expenses. If you bring us the latest bills, we will deal with changing the details for the direct debit (which, quite often, is a condition for the new supply of the service in Spain).
For further information, please call + 34 902 627 267, email SEP@bancsabadell.com or visit our website www.bancsabadell.com.
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Banco Sabadell mortgage offer
Banco Sabadell mortgage offer We offer a wide range of mortgage options competitive rates, with different repayment terms and conditions to perfectly suit your requirements.
Variable Rate Mortgages This kind of loan allows you to take advantage of falling rates, though obviously, it also incorporates rises. Its main advantage is that every 12 months is adjusted to math market rates.
Bonus Mortgage
Loan to value
The customer gets discounts on the standard rate when signing up for one (or more) of the following products: (Home insurance, Life insurance and Key Account).
70% if purchasing a 2nd residence or 80% if purchasing main residence. Maximum loan based on purchase price or valuation price whichever is the lowest.
Repayment period
Interest rate
Up to 30 years provided the borrower is not older than 75 at the end of the mortgage.
Variable, either referenced to the IRPH(1) or the Euribor.(2)
Monthly repayment
Prepayment fee (% of prepaid amount)
A fixed amount, adjusted once a year.
0,50% during the first 5 years of the mortgage, 0,25% the remaining period.
Although we can discuss your mortgage options, we cannot advise you on which mortgage you should choose. For advice tailored to your personal circumstances, please consult an independent financial adviser. (1) IRPHce (Índice de Referencia de Préstamos Hipotecarios – conjunto de entidades): Average rate for mortgages of all Spanish financial institutions, published by the Banco de España. (2) EURIBOR: European Interbank Offered Rate, published by the European Central Bank.
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Banco Sabadell mortgage offer
Fixed rate mortgages If you don´t want to be concerned about interest rate increases, you should choose our FixedRate Mortgage, which assures you constant monthly payments for the whole life of the loan. In addition, if you wish to benefit from lower repayment during the initial years, our Different mortgage will perfectly meet your needs.
Loan to value
Repayment period
70% if purchasing a 2nd residence or 80% if purchasing main residence. Maximum loan based on purchase price or valuation price whichever is the lowest.
Up to 30 years provided the borrower is not older than 75 at the end of the mortgage.
Interest rate
Monthly repayment
Fixed for the duration of the loan.
Constant during the entire life of the mortgage.
Prepayment fee (% of prepaid amount) 0,50% during the first 5 years of the mortgage, 0,25% the remaining years. When the early repayment causes a financial loss to the lender an interest rate risk fee of 4% will be charged.
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How much will it all cost?
How much will it all cost? Purchasing a property implies various additional costs and you may not know the exact purpose of the different payments that arise during the process, even if you are not finally granted a mortgage for the purchase. This is why we believe that you should have a clear image of the total expenses of the operation. Normally, they represent between 10% and 12% of the total purchase price (including banking and non-banking expenses)- this way you can consider in advance exactly how much you will need to budget and so possibly avoid any future issues.
Non – banking expenses Costs incurred before you apply for a mortgage. Your property reservation fee: When you’ve found the property you want to buy, you can expect the estate agent or developer to ask for an immediate payment to show that you are genuinely interested in buying the property. It will then be taken off the market for a while, allowing you time to apply for your mortgage with us. The property reservation fee is normally not refundable. We also recommend that you ask the vendor or estate agent for a copy of the property title (‘Nota Simple’) or the property deed (‘Escritura’), as this will speed up the process Solicitor’s fee. You may feel safer if you arrange the services of a legal representative in Spain to help you with the details of the sale agreement. Valuation fee (tasación): whether you need a mortgage or not, when deciding the purchase of real estate you should check if the property you want to buy is really worth the price the seller is asking and the best way to do this is to ask an expert to appraise the property in question. That is known as the Valuation. Moreover, if you need financing, as the maximum loan amount depends on the value of the property, the bank needs a valuation to determine the same. The valuation report or survey has a validation period of 6 months and must be issued by a Bank Of Spain approved valuation company. Certification of non-encumbrance (Nota simple de cargas): issued by the Land Register, makes sure that the property is not affected by a former mortgage or other encumbrances.
If you apply for a mortgage loan with us, Banco Sabadell, we can request the two above mentioned reports and certifications on your behalf although the subsequent fees will be applicable.
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How much will it all cost?
Costs incurred before you apply for a mortgage. The following costs, if the mortgage loan is required and granted with Banco Sabadell, will be carried by the buyer and will be deducted from the final mortgage amount. Notary fees: for completing and authorizing the public purchase deed and public mortgage deed. These fees are charged according to an official schedule and these will vary, depending on the value of the property and other factors. Land registry fees: for registering the purchase or title deed and the mortgage deed. They are also charged according to an official list or schedule available for all users. Administrative agent’s fee: for taking care of all the paperwork with the tax office, withdrawal of the deeds from the Notary and final registration with the land registry.
Taxes The property purchase (and the mortgage loan) involves the payment of taxes. This payment will depend on the purchase price declared before the Notary and the final granted mortgage amount, if applicable. Also, the amount of taxes will also depend on whether you are buying a new home straight from the promoter or a second hand home. New Home purchase: the buyer must pay the VAT. The current standard rate ranges at around 10% of the purchase price. (If the property is in the Canary Islands, the buyer must pay the Canary Islands indirect tax). Also, in this case the buyer must pay stamp duty (Actos JurĂdicos Documentados) to the region where the property is located. This tax is applicable for public certification or the deed of the new home purchase and will range from between 0.5% to 1.2%, depending on the area where the property is located. Second hand property or resale: the buyer must pay the transfer tax (Impuesto transmistiones patrimoniales) to the region where the home is located and you do not have to pay VAT. The transfer tax will be a percentage, depending on the region, of between 6% and 10%. Mortgage deed: the buyer and mortgage holder must pay stamp duty for the mortgage loan deed and, as explained above, it will be a percentage between 0.5% and 1.2% of the total amount of the mortgage liability, not the loan amount but the amount secured for the return of the main, interest and foreclosure costs. PlusvalĂa: this is a tax on the increase in the value of the property while it has been under the ownership of the vendor. It is normally payable by the vendor but it may be stipulated that the buyer is responsible for payment. If so payment should be agreed during the negotiations. Impuesto sobre la renta de no residentes. This is a Capital Gains Tax, payable when the vendors are also non-residents. It is 5 per cent of the property sale price and is usually payable by the vendor.
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How much will it all cost?
Costs when you become the owner of the property. Once you complete and sign the property purchase deed, you become the owner of your new home in Spain and with this there will be additional costs that arise upon completion of this process - you will be responsible for these costs: Impuesto sobre Buenes Inmuebles (IBI). This is the main local property tax, based on the official value of the property. The percentage of the value charged as tax varies from area to area. Contibución Territorial Rústica. This is the same as the IBI outlined above but for properties located in rural areas. Tasas y Cargas. Some municipalities raise additional taxation for the services they supply in their area such as collecting rubbish, cleaning the streets or beaches and so forth. Municipalities can also include a charge for the use of a vehicle in the area, although not all do so. The amounts of these tasas y cargas are not generally very high.
Compulsory Property Insurance This is an insurance policy required by law to cover damage to the property used as collateral for a mortgage in Spain. It only protects the building from damages caused by fire, but the contents, i.e. all your personal items, are not included. That’s why an additional insurance is definitely recommended. You will find useful information on how to protect your property on the next chapter.
Loan set up fee Finally you have to add the loan arrangement fee, a percentage of the mortgage amount. At Sabadell it ranges between 1% and 1,50% ( minimum 750€) depending on the acquisition of other Sabadell products and services.
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Step by Step
We take you through the process step by step Application There are several ways to apply for a mortgage with Sabadell: by calling our International Center on +34 902 627 267, by e-mail: SEP@bancsabadell.com or by visiting our website: www.bancsabadell.com. We will inform you on the most important details of our mortgage products and if you decide to proceed with us, we will be able to provide a preliminary affordability study according to your instructions, with no commitment on your behalf. If the result is to your satisfaction, you would then proceed with the mortgage application, providing the requested supporting documentation. Bear in mind that we always need the following documentation in order to correctly manage your application. The original documents have to be shown before the mortgage/ purchase contract is signed.
Documentation required from each applicant • Passport or identity card • NIE • If applicant is employed: – Last 2 pay slips – Last year tax declaration form (P60 or equivalent) – Letter from employer • If applicant is self employed: – Last two years tax return (SA302 or equivalent) – Last two years audited company accounts – Accountant’s letter
Your application and queries will be handled quickly and efficiently. We promise you a response within
48 hours!
• Credit report (Equifax, Experian, …) • Last six months bank statements • Others: private purchase agreement, public ownership deed, rental agreement etc - depending on the case.
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Step by Step
Insurance and protection Fire insurance is compulsory for every property you want to use as collateral for a mortgage in Spain, but we recommend you to consider at least two other types of insurance in order to protect your home against adversity. First, the Home Protection Plan, a comprehensive insurance for your property, and then a mortgage – related Life Insurance , which will cancel the pending debt of your mortgage in the event of death and, optionally, permanent disability of the mortgage holder, all to the benefit of your family. If you finally decide to subscribe these two insurance products or either of them, you may achieve a discount on the standard rate of your mortgage
Completion And once Sabadell has approved your application, all you have to do is to bring the documents indicated below and we will take care of all the rest.
Are you...
Then we will need...
... buying a new home from a developer and applying for a mortgage on the same property?
... a ”New Building Certificate” from the developer.
... buying an existing home and applying for a mortgage on the same property?
... a photocopy of the deeds of current owner. ... Updated copy of owner’s community certificate. ... Last local council tax bill (IBI). ... Original debt certificate (in case there is an existing encumbrance to be cancelled with the purchase and mortgage operations).
... planning to build your own home?
... a photocopy of the deeds of land or plot. ... building project stamped by the Architects Association. ... the planning permission. ... compulsory 10 years construction insurance.
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N.I.E.
N.I.E. If you are non-resident in Spain, do not forget to undertake the necessary steps to receive your N.I.E. (N煤mero de Identificaci贸n de Extranjeros), the tax identification number for foreigners, because you will need it for any economic transaction that you want to carry out in Spain, such as Real Estate purchase and for regulation of taxes involved. You need the N.I.E. for the signing of the deeds, and for the Property Register Office (Registro de la Propiedad) to register the purchase in your name. The N.I.E. is a document issued by the Spanish Home Office and should be applied for at the Oficina de Extranjeros of any National police station. In order to apply, you will need to take your passport, a photocopy of the same and two passport size photos. The certificate can then be collected approximately two weeks after the application depending on their workload. If you want someone else to process your application for you, you can confer Power of Attorney (Poder) your lawyer(s), and they can then collect your identity number from the police station for you.
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Glossary of financial terms
Glossary of financial terms Referring to mortgages in Spain At Sabadell, we want to make the home-buying process as easy and trouble –free as possible for you. You will benefit from our full service in your language, but we cannot avoid the fact that public contracts, deed s forms etc..have to be drawn up in Spanish .That is why we have added this glossary : it will help you to understand the key concepts of these documents and, with the support and advice of your branch , together we will achieve maximum transparency and security for you.
a c
Amortizacion (Repayment) Repayment of the initial loan amount by means of a scheme of instalments, including a repayment of capital borrowed and an amount for the interest charged. According to the type of mortgage, these instalments can be fixed for the whole life of the loan or vary with interest rate fluctuation. Cancelacion anticipada (Early Repayment or Eary Redemtion) This means the total or partial repayment of the borrowed amount before maturity. In partial repayments, you can choose to reduce the monthly payment and keep the agreed final maturity date, or keep the same amount of instalment but shorten the term. Cancelación registral (Register Discharge) Once the mortgage has been repaid, the encumbrance has to be released from the Land Registry. This involves cost of Notary, Registry and Administrative Agent. Carga ( Encumbrance or Registered Charged) Legal charges regarding a determined property entered in the Land Register, i.e. mortgages, usufructs etc. Our recommendation: Before signing the purchase contract, ensure that there’s no encumbrance related to that property in the Land Register. Cédula de habitabilidad (Occupancy Certificate) This document certifies that the home meets minimum occupancy conditions. You will need to get this document from the promoter when contracting utilities such as water, electricity and gas.
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Glossary of financial terms
c
Comisión de apertura (Opening Fee or Loan Arrangement Fee) This is a percentage of the loan discounted from the total amount when it is paid into your account, for services rendered in granting and processing the mortgage. Comisión de cancelación anticipada (Early Repayment Fee) This fee, indicated in the mortgage contract as a percentage of the repaid amount, compensates the lender for the loss of interest payments expected for the period between the early redemption and the agreed maturity. Certificado de Eficiencia Energética (Certificate of energy efficiency) Properties for sale or rent must have it. Otherwise owners can be fined. This specifies, with a scale of seven letters from A to G, the level of C02 emissions compared to the dimensions of the building. This certificate is issued by the Valuation Company Comunidad de propietarios (Owners’ community) This refers to the group of different owners in a property. Compraventa de vivienda (property purchase) Is the legal document recording the final understanding of a purchaser who agrees to buy and a seller who agrees to sell the specified items under stated terms and conditions. Contrato de arras (private purchase agreement) It is the previous step to the formal consent to the sale.
d
Depósito (Deposit) It is part of the purchase amount, paid when the private purchase agreement is signed to give security for the completion of the sale. Diferencial (Margin) This is a set value throughout the term of the mortgage which is usually expressed in percentages or fractions and which is added to the value of the reference rate to calculate the interest rate for each revision for variable rate capital repayment mortgages.
e
Escritura (Deed) It is a public document authorised by a Notary that certifies the legal capacity of the parties, their identity and details the legal issues and obligations according to the law. The property purchase and the mortgage loan are granted and issued with this kind of document before a Notary. The purchaser obtains a first copy of the deed once all taxes have been paid and the corresponding registration in the Land Registry has been completed.
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Glossary of financial terms
e g h i
EURIBOR European Inter-Bank Offered Rate, an index based on the interest rate for deposits in Euros at 12 months that is published by the European Central Bank and commonly used as reference rate for variable rate mortgages.
Gestoría (Administrative Agent) The professional adviser who looks after dealings with the Register an the payment of taxes to Tax Authority .
Hipoteca (Mortgage) A legal charge entered in the Property Register when a real estate property is assigned to be collateral for a mortgage loan.
Impuesto actos jurídicos documentados, AJD (Stamp Tax) This tax is payable on sales transaction subject to VAT (a percentage on the deed amount) and mortgage loans (a rate on total coverage of the mortgage). Impuesto sobre el valor añadido, IVA (Value Added Tax, VAT) Sales made directly by a developer (newly built homes) are subject to VAT. The current standard rate is 8% on the sales value in case of private use and 16% in case of commercial use. In the case of Canary Islands instead of VAT the tax applicable is IGIC (Impuesto General Indirecto Canario).” Impuesto sobre transmisiones patrimoniales, ITP (Transfer Tax) This tax is payable instead of VAT when the property is not newly built. In this case, the standard rate is between 6% and 10%, depending on the region and it is independent of the assigned use of the property. Indice de referencia (Reference Rate) This base rate is, on variable rate mortgages, used to calculate the new interest rate when it is reset. Our advice: Pay attention to the fact that the reference rate, together with the margin, determines the amount of the future instalments. Interés ordinario (Ordinary Interest) That is the nominal interest rate. It has to be specified in the contract whether the rate is fixed or variable throughout all or part of the loan.
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Glossary of financial terms
i
IRPH Índice de Referencia de Prestamos Hipotecarios = Similar to the EURIBOR, this rate is used as reference for variable rate mortgages and published by the Banco de España. It represents an average rate for mortgages offered by all Spanish financial entities. IBI (Impuesto de Bienes Inmuebles) This is the annual local council tax.
n
Notario (Notary) The Notary acts as the public official when signing the public deeds, such as the sales or mortgage loan agreement. He is obliged to ensure that current legislation is fulfilled and to defend the interests of the parties, particularly the borrower’s interests. NIE (Non Resident Identity number) Official document issued by the Spanish authorities to identify Non Residents in Spain. Identity certification is compulsory for Notary completion and in order to set up utilities with the property.
p
Periodicidad de las revisiones (Resetting Frequency) This means the frequency of interest rate resettings on variable rate mortgages, which are usually carried out once or twice a year. Plazo de amortización (Term or Repayment Period) The period of time during which the loan capital and the corresponding interest have to be repaid. Préstamo hipotecario (Mortgage Loan) Usually known simply as Hipoteca (mortgage), this is a loan granted by a lender and backed by a property. Poder (Power of attorney) This is a public document authorized by a Notary where somebody is appointed to act on behalf of the document’s grantor. Plusvalía (Capital Gains Tax) It is a tax on the profit made from the sale of an asset, i.e a home property.
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Glossary of financial terms
r s
Registro de la propiedad (Land Register and Land Registry) The Land Register contains all acts, contracts or legal charges referring to a property, such as ownership or encumbrances. Registro de la propiedad is also the local department responsible for maintaining the Land Register, i.e. the Land Registry. Subrogación (Remortgaging with another lender) If you have already a mortgage, but another lender offers you better terms and conditions for your mortgage, you can remortgage, i.e. transfer the mortgage and all the corresponding rights to this new lender. Subrogación de deudor (Remortgage of the debtor) This is a substitution of the debtor´s mortgage. That is to say, when the person who buys a mortgaged property takes responsibility for all debts and encumbrances that the seller had towards the financial institution that conceeded the mortgage. Seguro (Insurance) The act or system of providing financial protection for property, life, health, etc, against specified contingencies and involving payment of regular premiums in return for a policy guaranteeing such protection.
t
Tasa anual equivalente, TAE (Annual Percentage Rate, APR) This represents the effective cost of a loan calculated as if it were paid as one single repayment each year. It has to be indicated on any loan offer to make it easy to compare different loan offers with different characteristics (interest rate, commissions, reference rates, margins, etc.). Our advice: All offers must indicate the TAE value. It will help you compare with other products and make the best and most profitable decision. Tasación (Valuation) An independent surveyor company carries out the valuation of the property in order to determine the current value of the home within the property market and to specify the maximum amount that can be financed. The valuation is valid for six months after the date of issue.
v
Our advice: It is important to ask for a copy of the valuation. It is a service you pay for and you have the right to demand a copy. Verificación registral (Land Register Check) That is the examination of the Land Register records of a property, verifying the legal owner and the existence of charges, such as mortgages, encumbrances, etc. The document where all this is reflected and that must be presented to the bank is the “Nota simple de cargas”.
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Sabadell Branches at Your Service
More than 2000 Sabadell Branches at Your Service And 200 specialised offices where we can attend to you in your own language.
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For more information: (+34) 902 627 267
SEP@bancsabadell.com 17
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