FISCUS MORTGAGES - INFORMATION AND ADVICE

How To Buy In Spain

Essential notes for purchasing a property in Spain

1) Please note that you will need to obtain an N.I.E. number (Número de Identidad de Extranjeros) – these must be applied for in person at any National Police Station in Spain and are required for opening a bank account, contracting goods and services (telephone, electricity etc) and dealing with the national and local tax authorities.

2) Please ensure that you will have full title to the property on completion and that the "nota simple" is available for the lender. This document is required before a valuation can be carried out.

3) If the ‘Nota Simple’ (this is the document that confirms the legal registration of the property) states that the property is ‘Rustica or Rustico’ (this is normally for properties outside of the main towns) - PLEASE REFER TO OURSELVES BEFORE PROCEEDING FURTHER AS IT MAY NOT BE POSSIBLE FOR US TO OBTAIN FINANCE FOR YOU THROUGH OUR LENDERS. The property must also state that it has been registered as a ‘Vivienda’ – this means the property has been registered as a ‘habitable dwelling’, been built over 5 years ago and the local council are willing issue a “Certificado de exencion de infraccion urbanistica”

4) With new properties, find out the date the property will be registered in your name(s), as the lender cannot lend on the security of the property until it has been registered.

5) Whilst all reasonable steps will be taken to secure the loan on your overseas property as soon as possible, delays may occur due to the Spanish legal and administration system.

6) Check with the estate agent/lawyer that you are aware of the costs charged by the legal & government authorities for purchasing or remortgaging a Spanish property, noting that the lender will have their own legal costs for assigning the loan (the cost of which they will normally advise when they issue the mortgage offer).

7) It is essential that you take the appropriate independent legal advice before signing the sales contract or paying a deposit, if purchasing a foreign property, as would be expected if you were purchasing in your own country. The bank will require a copy of this document to be forwarded with the relevant application form. However you are able to sign this contract with the clause “subject to mortgage finance” as the contract, once signed is legally binding.

8) Please be aware that the Notaire may be incorporating within his charges, costs for assigning the mortgage and you should establish with the Notaire the actual cost before proceeding with a loan application.

9) It is advisable to arrange your mortgage finance before agreeing to purchase a property.

10) The completion of a Spanish mortgage takes place in front of an appointed Spanish Notary and all parties to the mortgage, including the vendor, lawyers and a representative of the lender need to be present. However a power of attorney may be used to sign on your behalf for the mortgage and land deeds. A copy of this power of attorney will need to be presented to the lender in good time before the completion.

11) A Spanish bank account will be required and some lenders offer this as part of their service, but not all.

12) Life assurance will be required to cover the loan, noting that it is not mandatory with all lenders, but is advisory where not a condition of the loan.

How much can I borrow & what proof of income is required?

- Spain -

Please note, that there no non-status/self-certification mortgage facilities available in Spain (although renting out your property is permitted), all loans need to be supported by a minimum requirement of proof of income, i.e. if employed - copies of your last three month's payslips & copies of your latest P60/Employer’s Reference together with copies of your last 6 month’s Personal Bank Statements will be required or alternatively if you are self-employed - copies of your last three years Audited Accounts & copies of both your last 12 month's Business and last 6 month’s Personal Bank Statements will be required on application.

Unfortunately in Spain the Spanish Lenders will NOT take into consideration any proposed Rental Income from the property for mortgage purposes/repayments.

Your loan is based on your joint net “take home” pay and is calculated on an affordability basis. All your existing liabilities including any mortgage/rent payments, personal and bank loans and any maintenance (ie: Divorce) payments together with your proposed Spanish mortgage payments must not exceed 35% of your net monthly income.

Example (for Repayment Loans Only):

Net joint monthly income £ 2,500 times 35% of that figure is £875 minus existing monthly mortgage payment £300 – No other liabilities. This leaves a balance of £575 for a proposed Spanish Mortgage payment.

Example (for Interest Only Loans Only):

Net joint monthly income £ 2,500 times 30% of that figure is £750 minus existing monthly mortgage payment £300 – No other liabilities. This leaves a balance of £450 for a proposed Spanish Mortgage payment.

Stage Payment Funding In Spain?

Please note, that if the property is to be constructed and stage payments are to be required, the land must be purchased from you own funds and also registered in your own name’s – not the Builder/Developer’s – in order for the proposed Lender to obtain a legal charge against this and also to enable them to secure funds against it. Without this legal registration the Lender will not release any funds until the property is fully constructed and registered (which will mean upon completion of the total building works).

Alternatively if this is not possible, when the property is fully constructed the Builder/Developer’s must provide the Lender with the 'Certificate of Final Construction', thus enabling the Lender to take a charge against it and release the required amount of funds.