What do you need to know before buying a house in Spain?
Buying a house is a very important decision, especially from a financial point of view. You have to have certain clear aspects before taking the plunge.
Buying a home is one of the most important financial decisions in a person’s life. Before taking it, it is worth considering some questions in order to make the best possible decision: What is my economic solvency? How much money should I have saved to buy a property? or what type of mortgage is best for me? To answer these questions, the advice of a mortgage professional is essential.
What is my personal and financial situation?
The first thing you should analyze is your economic solvency and your borrowing capacity to buy a home. These aspects are fundamental since the budget for the acquisition of the house depends on them.
With stable income and a positive balance between expenses and income, a favorable situation will be available to be able to buy a property. The recommendation of the experts is not to allocate more than 40% of the income to pay the mortgage payment.
How much money should I have saved to buy a house?
Buying and selling a home involves a significant financial outlay, so it is necessary to have some previous savings. It must be borne in mind that banks offer a maximum of 70% of the purchase or appraisal value for the acquisition of a first residence, so the future owner must have the remaining 30% in savings.
To this we must add the expenses associated with the sale (notary, home appraisal, taxes…) which represent between an additional 10% and 15%, approximately. Therefore, in total, you should have around 40% of the value of your home saved.
What taxes do you have to pay to buy a home?
The taxes to be paid vary according to the type of property. If it is a new construction home, you must pay the value added tax (VAT), which is 10% throughout Spain, except in the Canary Islands, where the Canarian indirect general tax (IGIC) is paid, of 6, 5%. In addition, this type of property is taxed by the tax on documented legal acts (AJD), which depends on the region where the house is located and ranges between 0.5% and 1.5%.
On the contrary, if it is a second-hand home, you must pay the property transfer tax (ITP), which ranges between 6% and 10% and also depends on the autonomous community in which the property is located.
In addition, in second-hand houses you must check their state of charges, that is, know if the house has debts or not through a simple note, analyze the general expenses that must be faced (for example, reforms in the property) and even possible temporary or extraordinary contributions, which could lead to a price reduction.
What requirements must I meet to be granted a mortgage?
All the requirements to request a mortgage are included in one: demonstrate that you have solvency within the family economy. To do this, having a stable employment situation, a demonstrable fixed income -of approximately three times the monthly mortgage payment-, in addition to a good credit history, are essential conditions to deal with this long-term loan.
What is better, a fixed or variable mortgage?
Before making the decision, the differences between the types of mortgage should be analyzed:
- Fixed-rate mortgage: the monthly payment remains fixed throughout the mortgage contract.
- Variable-rate mortgage: the monthly payment has a fixed and a variable part, which changes based on a reference index, which in Spain is usually the Euribor and which banks usually review every six or 12 months. If this index goes up, so will the monthly mortgage payment and vice versa.
How many years can you request a mortgage?
The longer the mortgage repayment term, the lower the monthly installment but the higher the interest, and vice versa. How many years should you ask for a mortgage? The choice will depend on the income level of the homebuyer. With a high income, you can opt for a mortgage with a repayment term that ranges between 10 and 15 years. On the contrary, if the future owner has a low income level, the term can reach up to 30 years.
In any case, when buying a home it is advisable to have the professional advice of an expert, such as that of the bank, who will help you throughout the process and resolve any doubts that may arise.
When buying a home, it is advisable to seek advice from a real estate expert, such as Marbella WOHNEN, who will help you throughout the process and eliminate any doubts you may have.