Laws & Taxes
Any kind of property in Spain must be registered in the Registro de Propiedad (Register of Property) where you can get full information on who owns the property, its exact price, its precise area, as well as the presence of a possible debt holder.
The main official document called ‘Escritura Publica’ is issued to the holder and is then assigned its own registration number, record and sheet number, and volume for its entry in the Register.
By Spanish law only the holder of the real estate, or the person designated by them and certified by a notary has the right to sell the property. As a rule, the agency is trusted with the right to sell it, in which case the agency must have a corresponding license.
Each firm or agency also has its Escritura, the data of which is stored in the Register of Property in Spain where you can make inquiries about it.
If suddenly a question about the lack of confidence arises, you are given a document called Nota Simple Informativa (Simple Informational Note).
If there is more than one owner to the property, or the owner is married, then according to the requirements of the Spanish Civil Code, when the sale takes place, the agreement and presence of both parties is necessary, or a notarized power of the attorney.
When purchasing real estate in Spain, the conventional process of the sale registration goes in act:
The buyer opens an account in a Spanish bank in his name; then makes the deposit and transfers the Money.
When a Property is chosen, a private contract is made in triplicate between the buyer and seller of the property, during the signing of which the buyer pays about 10-20% from the total property cost as a deposit, in the form of a check, certified by the bank.
After the signing of the private contract, the buyer (non-resident in Spain) should issue the NIE (Foreigner identification number). It is necessary for the signing of the notarial deed of purchase.
If necessary, the buyer can take advantage of a bank loan (up to 70%). In this case an independent assessment of the property is made, after which within 15 days the bank draws out a decision about the loan amount, for how many years and at what percentage.
After signing the private contract (deposit) – you have 60 days to complete the registration of the acquired property in the notary office (the signing of the deed of purchase certified by a notary).
At the time of signing the deed of purchase at the notary, you pay the difference in cost of the acquired by you property with a bank check (In the case of receiving a bank loan, the bank representative will be present at the notary).
After the signing of the notarial deed of sale, you get the keys, a notarized copy of the agreement. The original “Escritura” is sent to the property register, where it passes the state registration within the following 30-60 days.
Prior to the acquisition of real estate, our company verifies the property in the Register of Property, bank, tax management for the ‘purity’, evidenced by certain documents and extracts from the register of property, in the case of a mortgage, the bank itself, in turn, performs a similar verification before signing the Escritura at the notary.
On the basis of the ‘escritura’ of your property and the extract from the property registry you can get a one-year Schengen visa at the Embassy of Spain in Moscow (the procedure is executed within 10 days).
THE COST OF MORTGAGE IN SPAIN
The cost of a mortgage credit, the one paid by the loan borrower to the banking establishment issuing it, consists of two parts: interest rate and commission. However besides that, what affects the final price is the form in which the loan is returned (the system of loan repayment) and other obligations, which are usually taken care of by the borrower. Let us examine this issue in further detail:
The cost estimate. Evaluation is needed to determine the value of the dwelling, which is then taken as the basis for the calculation of the mortgage loan.
Verification of the entry in the Register of Property. This is the expenditure for obtaining the simple information from the Register of Property. The cost of this procedure is typically less than 5-6 euro.
Notary fees. The mortgage loan issued by drafting the notarial deed, which reflects the conditions and characteristics of the loan to be granted.
Tax. Any notarial act entails the payment of tax on the registration of documentary legal acts, the size of which is 0.5% of the total guaranteed value (base price, interest and expenses), including the notary deed confirming the registration of the mortgage.
The cost of registration. These costs are caused by writing the notarial deed in the Trade Register.
The fee for the opening of a line of credits. From 1% to 2% for the services of the institution.
The fees charged for opening an account. This operation is performed through a bank account, which entails a corresponding fee for the maintenance and management of the account.
The costs of registration and payment of taxes. Banks are turning to firms dealing with registration and taxes, as well as the registration of the title deed and the issues associated with these hassles.
Insurances. The banking establishment will require you to insure the property against fire, against all risks or property insurance.
Interest. This is the main component of the cost of mortgage credit. The bank gets back not only the sum of the loan, but also the percentage of the interest that the borrower owns every moment, ie with the difference between the loan amount and the amount returned every moment (at the time of payment of each quota). This is the percentage.
In general there are two types of interest rates in the market: fixed and variable. The fixed interest rate – this is the interest rate that is set at the time of the loan and does not change for the duration of its existence.
The variable interest rate, on the contrary, may vary depending on the official interest rate in the money market, currently being installed at the European Central Bank for the whole of Europe, depending on the index set by the contract for the provision of mortgage credit. At present, very often, in practice, the mortgage interest rate is variable, so that if the interest rate falls, then the quotas, paid periodically, are proportionally reduced; and if the interest rate rises, the quota is increased proportionally to its growth.
that is why before taking out a mortgage loan it is necessary to get a consultation from a specialist about the tendency of the development of the money market in the direction of fall or rise, as ultimately, the interest rate you will pay consists of the officially fixed variable interest rate plus the difference (additional interest), which you must negotiate with the banking institution, and which is usually fixed for the entire term of the mortgage. All this information can be found in the newsletter.
To compare different offers, it is necessary to pay special attention to the rate of TAE (the Equivalent Annual Rate), which represents the payable interest rate; and keep in mind the commissions taken by the bank, as well as the form and frequency of payment of the quota (monthly, quarterly, etc.)
- The system of loan repayment (the form in which it is returned). The most important are the following aspects:
- The costs associated with the payoff of debts or early repayment of the loan. They are usually 1% of the amount repaid for loans with a variable interest rate of about 4% for loans with a fixed interest rate.
- Interest for late payment. If upon the expiration of the payment obligations, on the return of the loan are not met, the interest may exceed 4 points the annual, valid, nominal interest rate.
- Expenses related with the execution of the early repayment of the loan. In order to execute early loan repayment it is necessary to revoke it, going through the same procedure as when you open it: a notarial act, tax payment for the Documentary Legal Acts and record of the notarial act in the Trade Register.
- Other liabilities, which are usually taken care of by the side taking the Insurance credit. The bank establishment will require of you to make an insurance against fire, against all type of risk or property insurance. At last, it is necessary to keep in mind that normally the bank establishments require a preparation of the insurance against the damages of the housing, since its safety is contained in the economic value of the mortgaged real property, that is why in case of disaster the Law provides for the distribution of mortgage credit in the amount corresponding to the damages, which in these cases is paid to the owner.
a. The validity term of the loan, i.e. the number of years during which the loan is returned. It should be understood that the longer the duration, the smaller the monthly quota but ultimately more interest paid;
b. Periodical payment of quotas, i.e. intervals between the payments of credit. The most common form is the monthly (one receipt for payment of the quota per month), but also the payment can be made on a quarterly basis and at other intervals as agreed;
c. The size of the quota. The size of the quota is determined by two elements: the part of the loan capital, which is repaid and the interest that is paid for the full amount of the loan. Typically, the French loan repayment system is used, according to which the quota is fixed for the entire period of the loan (except in the case when it comes to variable interest, in this case it changes) so that the inner part of each quota percent decreases over time and the capital quota increases;
d. Finally, we need to explore the possibility of early repayment. This refers to the ability to repay the loan before the prescribed period expires. In this case, you should ask your bank to include the possibility of a separate point in the notary act and agree on the commission percentage, which the bank will take for the given operation.
Since the year 1994, a maximum limit of commission percentage is established for a mortgage loan by the law, with a variable interest rate that does not exceed 1% from the earlier repaid amount. For mortgage loans with a fixed interest rate there is no official limit, however, it is usually from 2 to 4% of the amount repaid earlier.
Moreover, some bank establishments require the registration of life insurance by the loan recipient, due to the fact that usually the regular payment of quotas comes from wages or professional royalties of the debtor.
Expenses when registering Real Estate:
– Tax on transfer of property (I.T.P.) = 7%
– Notary Expenses = 0,3…0,5 %
– Property Register = 300…600 €
– An independent evaluation of the property = 250…800 €
– Opening a bank loan = 1…2 %
– Property Insurance = 300…600 €
The expenses mentioned above are paid with a bank check, addressed to relevant insitutions.