If you’re moving to Spain, or thinking of doing so, you need to make sure you have all the information you need, so you know what you’re getting into. That’s where our Ask The Expert series comes in.
We’ve been speaking to two Spanish solicitors to help explain the process of buying a property out there, and answer some of your questions.
Rafael Berdaguer is a founding partner of Rafael Berdaguer Abogado, a Marbella law firm which helps expats to buy property in Spain
What things do they not tell you in the guide books about what’s involved in choosing the right mortgage?
Normally no reference is made to what happens if the mortgage is not paid and the interest rate applicable in case of delay in payment which normally increases considerably. Also if there are various unpaid instalments and the bank proceeds with the execution at a certain stage the bank may not accept to stop this unless the full debt is paid off in one lump sum of money or with a considerable surcharge.
What part of the process of buying a home in Spain should expat buyers be most wary of?
No money should be paid out unless you are fully aware of all the charges, liabilities, vendor’s circumstances, and until the necessary searches are carried and the outcome is satisfactory to you. We would always advise that any payment should be made through a solicitor who will make sure that the payment is correctly made and the investment protected.
Gustavo Calero Monereo from C&D Solicitors, has more mortgage tips for British expats buying a property in Spain:
There are some mortgage issues that should be checked:
In Spain, the variable rate is the ‘Euribor plus interest’.
[Euribor stands for Euro Interbank Offered Rate, and the Euribor rate is based on the interest rates at which a group of leading European banks borrow from each other. In calculating the rate, the highest and lowest 15% of all the quotes collected are taken away. You can read more about the Euribor rate here.]
The Euribor is very low at the time of writing, but it is important to check the possibility of having a fixed rate if you want to be sure about how much you are going to pay every month.
With a mortgage with a variable rate, it’s also very important to check that there isn’t any floor clause (where your interest rate can’t go below a certain point) in the mortgage loan.
Apply for the estimation of ALL the legal costs of the mortgage, including the obliged home and life insurance, which can often be very expensive.
Once the bank has confirmed that they will give the mortgage, they have to send you the binding offer (oferta vinculante). This document is the guarantee that the bank will indeed grant you the mortgage when applied for.
For more information on buying a property in Spain, and everything that entails, take a look at our Guide to Moving To Spain.