OUR ADDED VALUE POLICY
In order to ENSURE a SAFE PURCHASE at the BEST PRICE POSSIBLE, our company will take all the necessary steps and will provide you with additional services such as:
- Detailed knowledge of our properties, including the appropriate appraisal of the property.
- Verification of all the details recorded in the Land Registry (ownership, encumbrance and tax status such as mortgages, use rights, rights of way, court or administrative sequestration, area size, etc.)
- Checking, in the Town Hall, whether the Seller is up to date with the payment of the local Property Tax and the garbage collection fee and whether any infringement of the urban development regulations has been committed due to works, refurbishments, etc.
- Checking, by consulting the Owners’ Association, whether there are debts unsettled for ordinary fees and apportionments. So as to avoid unpleasant situations, it is extremely important to be aware whether there are apportionments approved in previous meetings which have not been paid yet.
- Information about the best offers provided by banks and financial entities for your mortgage loan and assistance in all the steps and formalities necessary to be granted the loan.
- We accompany our non-resident customers to apply for the Spanish Foreigner’s Identification Card (NIE), to open a current account in any bank or savings bank office and to request the change of ownership of the property to the companies providing water, power, gas and telephone services, as well as to the appropriate Town Hall.
- Application for the registration of the purchase in the Land Registry, payment of the appropriate taxes, etc.
- Quotations to carry out any works and/or refurbishments and contact with the appropriate companies for such purposes.
- Lease of your property, maintenance and cleaning service, etc.
YOU SHOULD KNOW…
- If you buy a house newer than 10 years, in the case of structural failures or damages in the house, you will be able to call the developer, the building company and the architect to take responsibility for such failures and damages, keeping the first owner’s rights.
- In the case that the house is older than 10 years, within a term of 6 months from the purchase, you are entitled to claim the repair of failures and damages by the seller.
There are several types of houses and, therefore, these cannot be sold at any price:
- Viviendas de renta libre (Non-subsidised house): The purchase of this type of housing is not subject to any specific requirement or to constraints regarding the price.
- Viviendas de protección oficial (VPO) (Subsidised housing): This is the name given by the appropriate Spanish Public Administration. These are main features of this type of housing:
As for the rest of officially protected houses, in order to be granted a subsidised house, the applicants must meet some specific requirements.
The transfer of this type of houses is limited: These are houses which cannot be sold in the free market.
The price is set by the Spanish Ministry of Development (Ministerio de Fomento) and by the Spanish Autonomous Communities.
For financing this type of houses, qualified mortgage loans are granted, i.e. these loans have specific conditions governed by the public administration, in order to make it easier for the purchasers to buy the house. Subventions and other kind of financial support may be also granted for the purchase of subsidised houses.
These houses must be used as the applicant’s usual and permanent residence.
Furthermore, the applicant must also meet the requirements which the appropriate institutions in the Spanish Autonomous Communities may establish. These are some of the most common general requirements:
To not be the owner of any other subsidised house within the national territory.
To not have any house in the municipality where the applicant intends to obtain the subsidised house.
To have a salary/wages not exceeding the limits established for each type of subsidised house. Also, the incomes per familiy cannot exceed 5.5 times the limit set, unless the Autonomous Community establishes other limits lower than such amount.
What is a mortgage loan?
This is type of bank credit to fund the purchase of a property. For properties to be used as a permanent residence, bank entities usually grant the 80 percent of the value resulting from the appraisal of the property to be purchased. The property is the security for the return of the capital granted. Thus, in the case of failing to pay the mortgage loan, the bank entity, upon filing the appropriate legal action, may request the seizure or sequestration of the property to be subsequently put up for auction.
When applying for a loan, financial entities usually request the applicant’s payslip, the income tax return, the quarterly income returns in the case freelancers, etc. Such evidence is used in order to check the applicant’s solvency and financial reliability.
In the case that the bank decides to grant the loan, the bank will issue a “binding offer” setting out all the terms and conditions. Such offer is only binding on the bank entity but not on the applicant, so you may reject the offer. The binding offer must be valid for, at least, 10 days and it must set out the capital subject matter of the loan, the repayment term, the ordinary interests, the administrative fees and the expenses which the applicant will be subject to in the case of accepting the offer. In the case of accepting the offer, the mortgage loan must be formalised in a public deed.
The mortgage is usually granted before a Notary Public at the same time of executing the purchase deed and the mortgage loan.
Mortgage loan interests and expenses
There are three types of interest rates:
- The variable interest rate is the mostly used: This interest rate is applied to long-term mortgage loans. The fee to be paid varies from time to time (every 6 months, on a yearly basis) based on the rate chosen (e.g. the effective interest rate)
- Fixed interest rate: The fee to be paid is the same during the loan validity and, therefore, you will exactly know how much you will pay until the loan expires. However, in the case that the interest rates in the market decrease, such decrease will not be applied to your loan.
- Mixed interest rate: This is a combination of the two previous interest rates. A percentage of the interest rate is fixed, whereas another percentage is variable.
Expenses to be paid when formalising a mortgage loan:
The costs arising from the loan application such as, for instance, the expenses for the property appraisal and the report issued by the Land Registry (nota simple).
The charges for taking out the mortgage: These costs are paid upon the execution of the deed. The amounts vary according to the financial entities. This fee is used to cover the expenses for assessing, granting and processing the loan. However, some entities do not charge this administrative fee.
Notary’s and Land Registry Office Fees: The amount payable depends on the capital guaranteed.
Before granting any loan, bank entities usually ask the applicants to take, at least, a fire and a life insurance policy. These insurance policies are also paid upon the execution of the deed.
The financial entity will keep a certified copy of the loan deed and you will be provided with a notarial non-certified copy of the deed.
For legal advises we are working together with the law-firm SCORNIK-GERSTEIN.