Guide to Mortgages in Spain – Commercial and Residential
On average, the cost of buying a property in Spain will be in the region of 10 to 15% of the purchase price depending on the complexity of the procedure and the area of Spain in which you are buying.
1. The Notary fees are established by law and depend on the mortgage value
2. The Registry Fee/Land registry is usually 0.25% of the value of the mortgage
3. The Property Tax is 7% of the declared purchase price
4. The cost of the Property valuation depends on the value of the house usually it is from 0.80 to 1.5%
5. Spanish lenders will charge you an Opening Fee of between 1 and 2%
6. Stamp Duty (AJD) is paid to the government and is calculated as a percentage of a Spanish mortgage (between 0.85% and 1.75%).
Obtaining mortgage finance in Spain has become increasingly difficult over the past few years, with banks restricting lending. In particular Spanish banks are reluctant to lend finance for new property purchase, as they already have huge stocks of repossessed properties on their books. However, if they are trying to sell on this repossessed property stock on the open market, they have been known to offer buyers 100% finance.
The options open to UK nationals wanting to buy in Spain (whether resident or non-resident), are via Spanish Banks, International Banks, and UK lenders. There are a wide variety of mortgage products around, and it is wise to seek mortgage advice for the most appropriate deal.
In terms of commercial finance there are two routes. A secured loan against the commercial asset in Spain, or a loan secured against a personal asset (e.g. a property in Spain, or Elsewhere). The difference between a residential and commercial mortgage application is how affordability is calculated, and the length of the procedure.
Usual process for commercial mortgage application can take between 4 weeks and six months. (As per LLoyds TSB Cross Border Financing). The key stages are:
1. Information gathering, discussion and initial data analysis
2. Issuing of an “Indication of Terms” which will outline the proposed facility structure and pricing.
3. Site visits, which will focus on assessing the quality of the receivables (and other assets)
4. Formal submission to the lenders credit committee/underwriters for sanction.