Purchase Process

What do I need to buy a house in Spain? Can I ask for a mortgage? What are the expenses associated with buying a property?

If you are looking to buy a property, we know that you are likely to ask many of these questions and we want to help you resolve any concerns you have regarding the process of buying a home in Spain. In this section we give you an overview of the steps to follow and the requirements you need to meet in order to be able to buy your new property efficiently and safely.

NIE (Foreigners Identification Number) The NIE (Foreigners Identification Number) is a mandatory document for any foreigner who wants to do any kind of business in Spain, as well as opening a bank account or, in this case, buying a home. It is a unique number that is linked to the person who serves to identify foreigners within Spanish territory.

How can I get the NIE?
To obtain it you must make an appointment at any Police Commissioner (in some there are waiting lists) and present your passport or original identity card together with a printed copy of it, and fill in the signed application form stating the reason for requesting the document.

In case of not being able to attend it can do so by representative but this must be accredited by power of attorney and the passport of the represented duly testified.

If you are a non-EU foreigner, all documents must be legalized and translated into Spanish for proper processing.

Do I need a bank account in Spain?
Once you have obtained the NIE you can start the procedures for the purchase of the property, it is not mandatory to have a bank account, but certainly have it facilitate the payment of taxes and expenses that will be incurred.

Earnest Money Contract

Unless the full amount of the defendant is paid for the purchase of the property immediately, an earnest money contract will be signed. This contract is a standard procedure in Spain that is used to reserve a property for a specific period of time, so a deadline is set to sign the deed of the property before a notary public. In the reservation or purchase-sale contract, a sum of money is agreed between both parties as a reserve, which usually represents 10% of the total price of the property, with the rest remaining to be paid at the signing of the public deed before a notary.

This contract binds the buyer and the seller to ensure the interests of both parties since if the buyer eventually desists from the purchase, he will lose the money deposited as a reserve, as well, if the seller retracts and decides not to sell his property, shall pay to the buyer a fine which is twice what the buyer has paid as a reserve.

The day of the date agreed in the contract proceeds to sign the deeds and the buyer must pay the remaining amount that will represent the difference between the total price of the property and the amount that has previously been paid as a reserve.

Property Registration
Although registering the property you have purchased in the Property Registry is not mandatory on the part of the buyer, doing so serves as legal support for your purchase so it is advisable.

Financing for purchase / Mortgage Application
In Spain foreigners have the same rights and obligations under Spanish law, which is why you can go to our banks to request financing for the purchase of property. There are different types of mortgages you can apply for in which the interest rate and the duration of the loan will vary. We must remember that in order to apply for a mortgage you must have previously applied for your NIE, as well as you must perform an appraisal of the apartment to buy, which is performed with an approved entity.

Expenses associated with the purchase in Spain
The taxes and expenses arising from the purchase are several and this results in the final cost of the operation. These are:
-VAT 10%, in the case that the house that is acquired is new or first transmission.
-ITP, Transfer Tax, in the case of resale sale of a second hand property. It is usually between 6 and 10% depending on the autonomous community and the different taxes or benefits applied in said CCAA.
-AJD, Document Legal Acts Tax, is paid in case of being a house that carries VAT (first transmission)and if you buy it with a mortgage. In Andalusia it is usually 1.5%.
-Notary Fees.
-Expenses for the registration of the deed in the property registry.

After the purchase of must pay other taxes such as the IBI (Real Estate Tax), or the Personal Income Tax (IRPF), and if you do not reside in Spain permanently you have to pay the Non-resident Income Tax.