Through whom can I buy my future home?
- Through an API (Real Estate Agent)
- Directly through a constructor or promoter
- Through a Real Estate Agency
- Directly through the seller

What to check before buying a home
We recommend a series of verifications that can save you from having posterior problems:

The Verification or Certification Register:
You must consult the Property Register to check the existence or non-existence of any condition or charge over the home (if the seller really is the owner of the property, if there are any rental leases in existence, etc.) that might affect the sale.

Urban Development Verification:
We recommend checking in the Town Hall to which the property belongs if the property is by any way affected in a negative way by a urban development plan, and also if it sticks to the existing urban development plans currently under effect.

The Writing:
The seller has to present the writing that corresponds to the home that is being sold. When the sale takes place, a new sale writing will be made between the buyer and the seller in which all conditions will be presented (price, payment form, etc.)

Urban Contribution:
It is convenient to check that the last urban contribution was paid and that it is presented under the name of the seller of the property.

What taxes are to be paid when buying a home?

Value Added Tax (VAT): This is only added onto new homes (1st transmission). The VAT added is 6% of the price of the home, or 3% on homes that are officially protected by a special regime.

Patrimonial Transmissions Tax: This tax is added onto 2nd hand or older homes. It is 6% over the written price.

Capital Gains: This depends on the characteristics of the home and the regions and autonomous community in which it is situated. The seller is obliged to pay this. The seller can therefore deduct 75% of the quota of the declaration of the rent of physical persons.

Note: The identification of the home: The writing is the only authentic “ID” of the home, as it is a title that assures its property.

What is a Mortage Loan?

Once you have checked all the documents, you are ready to buy. You can either pay the property in one whole sum, or pay through a mortgage loan.
A loan is generally a contract in which a financial body hands over a determined sum of money, obliging the person who receives it to pay it back in smaller amounts and within the conditions agreed upon between both parties.

A mortgage loan is a loan with a guarantee that is materialised in the mortgage of the property in favour of the bank that loans the money, which means that the financial body will become the owner of the home in case the conditions aren’t stuck to (puntuality, quotas, etc.). The loan is formalised in a public writing in order to become inscribed in the Property Register.

Types of Mortgage Loans

Fixed Interest Loan: This is a loan in which the client and the financial body agree on an interest rate that wont alter during the whole loan period.

Variable Interest Loan: This is a loan in which the interest rate changes every certain period of time (usually every year) and that sticks to a series of rules.

Who can obtain a Mortgage Loan?
In order to obtain a loan, the financial bodies demand certain personal guaranties over the property on which the loan is obtained.
The most common conditions are the following:

Presentation of the following documents:
- Photocopy of identification/passport number of buyers.
- Copy of the propertys writing
- Verification or Certification Register: a document given by the Real Estate Register that confirms the property is free of charges.

If you work for another person, you will also be asked for:
- Your last pay roll
- Last income declaration
- Other justification of income, if possible

If you work for yourself (you have your own business, etc.)
- Last income declaration
- Last annual tax declaration

How do I choose the loan that best interests me?

You will have to take into account the following factors:
A. The amount of the loan: In case of a mortgage, there are two types of limits that determine the total amount:
1. The house value: The maximum amount to be financed, in other words, the total amount that you will receive for the loan is usually between 70% and 80% of the valuation value of the property.
2. The applicant’s income: The sum given is limited so that the quotes don’t pass 35% or 40% of the applicant’s income and therefore avoid any problems in paying back the loan.

B. Interest. Interest is the ‘price’ the client must pay the financial body for having received a certain amount of money. The annual equivalent rate (TAE) is a formula that compares the different types of interest rate that each financial body provides.

Therefore, taking into account the interest type, loans can be classified into:

1. Fixed Interest Mortgage Loans:
The type of interest remains the same throughout the whole loan period. In this type of interest, both the clients and the financial body are at risk:
If the type of interest falls, the clients cant benefit from this fall, being able to pay a higher price.
If the interest type rises, it is then the financial body who is affected, as it can no more recuperate this rise from the client.
Because of this, the operation is fixed in shorter payments in order to avoid the risk of variation on both sides.
The principal advantage of fixed interest mortgage loans is that the client, from the beginning, knows the exact amount that must be paid throughout the whole loan.

2. Variable Interest Mortgage Loans:
The type of interest varies every certain period of time, in accordance with the previously established rules. The way in which the interests are established is the following:
The type of interest that is established remains fixed during a period of between 12 and 18 months. When this period has passed, the interest type varies in accordance with the index reference that was agreed upon in the contract.
The risks that both the financial body and the client run:
In periods of low interest types, the client pays less interest, and is therefore favoured.
In periods of high interest types, the client will have to pay a higher interest type.
Financial bodies therefore usually offer longer periods of recovery (usually between 20 and 25 years) instead of 10-15 years.
The advantages of a variable interest loan are the following:
You receive a longer period of financing, and therefore, the quota to be paid in each payment is reduced.
In case the interest type lowers, the quota that must be paid is lowered.

REFERENCE INDEXES: This is the variable through which the interest type of the loan varies. There are two types of referential indexes:
MIBOR: This is the price of the money in the interbank market in Madrid, which means, the price for which the banks and saving banks mutually lend money. This interest type is communicated daily be the Spanish Bank.

PRIVATE BANK: Obligatory the Bank of Spain; it is the medium type of the credit operations. There are two different types:
- Credit accounts of between 1 year to less than 3 years
- Loans od 3 or more years

THE SPANISH MORTGAGE ASSOCIATION: This is a reference index of the mortgage market of a three month period. This is calculated decreasing by 1 percentage point the medium value of the most popular interest types used in mortgage loans.

THE CECA (SPANISH FEDERATION OF SAVING BANKS) ACTIVE INDEX: This is the medium value of the personal loan operations of between 1 and less than 3 years and of loans with a mortgage guarantee to acquire the property after a period of 3 years.

In order that the interest type is used as a reference:

- It must be public and easily verified on the clients part.
- It must be objective, it mustn’t contain any doubts over its calculation.
- It must be neutral, the financial body cant influence it.

THE DIFERENTIAL: This is the sum that the financial body adds onto the reference interest type.
How is the reference interest type specified?
- A fixed sum can be established during the whole period of the loan.
- It can be established as a percentage over the reference index that has been used.

C. The Interest Period: This is the period of time in which the variable loan interest remains invariable.

D. The Quota that must be paid: The is the sum that the client promises to pay periodically (monthly, trimestrely, or annually) to the financial body that has given the loan through interests and refund of the capital loaned.

E. Recovery Period: This is the agreed upon period of time in which the client must give back the total amount loaned to the financial body. This period of time oscillates between 10 and 25 years and depends on:
- The type of commercial policy that the financial body offers
- If it is a fixed or variable interest type
- The age of the solicitant

F. Recovery Systems: There are different systems: the constant quota to be paid, constant capital quotas, quotas of growing capital, etc. The most common system is the quota to be paid constantly, in which the recovered capital rises throughout the period of the loan, reducing, therefore, the interests to be paid.
What expenses does a mortgage loan have?

A. Previous expenses:

The Valuation: The property must be valued by an independent expert from the financial body. This is a necessary process and the expert must belong to an official institute.

Register Verification: This consists in checking for any existing charges over the property.

Both procedures originate a series of expenses that the applicant must take charge of whether the loan is approved or not.
The formalisation of the mortgage loan is then carried out between 10 and 15 days afterwards.

B. Formalisation expenses

Opening Commission: This commission is established at the beginning of the loan and is usually a percentage of the loan amount.

Study Commission: This is also an initial charge made at the beginning of the process and is also a percentage of the loan sum.

Subrogation Commission: Subrogation is the act in which a person, assuming the debt, substitutes the holder of the loan and therefore converts himself into the owner of the loan. This normally takes place when a property is acquired directly from its promoter or constructor. The financial body must be in agreement in order for the subrogation to be able to be carried out.

Notary Fees: These are the fees of the carrying out of the public writing by the notary. The amount to be paid depends on the tariffs established in the writing, and on its number of pages.

Official Taxes: The constitution of the mortgage is subject to the Documented Legal Acts. The sum is calculated using a percentage of this tax. At the moment, it is a sum of 0.5% over the total guaranteed value. (Interests, fees..)

Inscription in the Property Register Fees: Once the writing of the mortgage loan is formalised, it must be enrolled in the correspondent Property Register. The respective financial body is he who carries out this enrolment.

C. Other Possible Fees:

- Delay interests
- Cancellation commission and part payment commission
- Modification of the contract commission
- Claims of unpaid quotas commission
- Emission and fees of delivery of receipts commission

What Insurance Must I Use?

- The Law obliges the holder of the mortgage loan to obtain Fire Insurance on the house that is to be mortgaged.
- It is also normal to obtain a life insurance that covers the risk of death of the holder of a loan, which cancels the capital due to be paid in this moment.

What Fiscal Advantages does a Mortgage Loan Offer?
The holder can obtain the following advantages:

Tax Income Deductions: Deductions of loans destined to finance:
- The acquisition of a habitual property
- Any investment or necessary fee in order to rent a home
- Any investment or fee of properties destined to professional or company use.

Deductions in the Tributary Quota:
- Up to 15% of the amortised capital can be deducted in the years of the loan destined to the acquisition or rehabilitation of a home that is going to substitute the habitual home or residence of the holder of the home.

What Must I Do If I Want to Change My Mortgage Loan to Another Body?

You must carry out the following procedures:

A. Choose an offer that best suits you.
B. In the new body, obtain information about the charge of loan fees.
C. Check that the saving of interests to be paid compensate the fees to be paid in order to change your mortgage.
D. If this change interests you, you must apply for the new loan at the new body, who will take care of the cancellation procedures of your actual loan. There is an actual law in existence that will greatly reduce the fees in charging the loan.