The purchase of real estate in Spain can be financed through national Spanish or foreign banks, although access to the latter has been hindered in practice by the new mortgage law.

In order to protect consumers from abusive practices, the new law provides, among other things, for the electronic transmission of conditions between the bank and the notary, which makes it necessary for the bank to use the digital platform enabled for this purpose. In practice, most foreign banks have yet to meet these new requirements, which makes it difficult to take out a mortgage with a foreign bank. 

As in practice this option would normally only be advantageous for non-residents with residence and their own bank abroad, indirect financing is often avoided here, leaving an encumbered property and the loan amount is used to buy the Spanish property. In this case, the entire process is carried out abroad and the mortgage is also registered in the corresponding property registry in the foreign country.

The connection with Spain is only achieved by using the loan amount to directly buy a property at no charge. Therefore, there are no more provisions that must be observed in the notarial appointment in Spain.

For residents of Spain, financing through Spanish banks is usually advantageous, especially if the property to be financed is the future habitual residence. In this case, banks usually finance at least 80% of the market value and the consumer has the option of paying off the mortgage for free or changing banks at any time.

 

Documents normally required:

1.     Simple Note from the Land Registry. It is usually provided by the seller or the real estate agent. If it is not available from them, an extract can be requested electronically at the registry headquarters.

2.  Last declaration of income tax (IRPF). It should be noted here that most Spanish banks continue to recognize only income tax returns (IRPF) for valuation purposes. If you have lived in Spain for less than a year and have not yet submitted your income tax return, you may be required to have the last return filed in the country of departure translated into Spanish.

3.   Payroll/Quarterly tax returns. If you work in Spain, it is usually enough to present the last 3 payrolls. If you are self-employed, the last 3 quarterly financial statements (forms 130 and 303) are normally required.

Steps to follow:

1.    Sign a private contract with the sellers with the right of withdrawal in case the mortgage is not granted.

2.   Consultation with the bank and presentation of the documents mentioned in the last section.

3.      Confirmation by the bank and drafting of internal documents in the branch.

4.     Election of a notary and electronic transmission of the conditions to the notary.

5.  Prior informative act of the conditions of the mortgage loan and drafting of the corresponding public deed.

6.    Appointment before a notary with the seller and the bank to sign the deed of sale and the mortgage deed.

(Note that at least 10 days must elapse between the receipt of the conditions by the notary and the date of signing the mortgage).

Expenses and taxes related to the signature:

According to the new mortgage law, the bank must bear almost all the costs related to the mortgage. In the case of a mortgage for the purchase of the habitual residence, the consumer only has to bear the expenses of the appraiser.

The bank has to pay all other expenses (notary, Land Registry, stamp, Agency). Since the purchase is usually signed at the same time as the mortgage, the Agency will continue to charge the associated costs. Regarding costs, the bank bears all the costs of the mortgage and the buyer bears all the costs of the purchase deed.

From our law firm, we will be happy to help you analyze your specific case, carry out the necessary procedures for the granting of your mortgage. If you are interested or have specific questions on the subject, we are available by email or phone.

Autor: 

María Santos Acedo
Lawyer & Partner
m.santos@sspartners.es
Tel: (+34) 951 12 13 06
Tel: (+34) 951 12 00 69
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