If you don’t know how to get a mortgage in Spain, you will be so glad after reading this post! Did you know that the granting of mortgages in Spain is one of the most advantageous in Europe? This means that you can buy a property with minimum interest rates, and all this without the need to be a resident of Spain.
The mortgage legislation in Spain for the sale of property to foreigners or non-residents is one of the most advantageous compared to other European countries.
One of the main advantages has to do with the low interest rates of the transaction, as well as the flexibility to become an owner.
Exemption from payment of Stamp Duty
With the new mortgage law of 2019, mortgage holders have more advantages and flexibility, including the cancellation of associated costs such as registration fees or notary fees, among others.
Associated costs, such as Stamp Duty, are now the responsibility of the bank.
So, what do you have to pay in terms of associated costs? The fee for assessing the real value of the property, which varies between 300 and 500 euros, as well as the agreement fee, which is between 1% and 1.5%, depending on the bank. Although it should be noted that some banks are starting to assume these costs.
Low interest rates
Interest rates on mortgages in Spain are among the lowest in Europe. This has been the case for more than 30 years. 🙌🏻
Payment with foreign currency
If you come from a non-European country, the good news is that the mortgage payment can be made in any currency other than Euro. This also applies to UK citizens.
General guidelines for getting a mortgage in Spain
For foreigners in Spain, as a general rule, a maximum of 60% or 70% of the value of the property is granted.
To obtain 80% or more of the financing, it is necessary to demonstrate that you have lived in Spain for at least two years, having made the relevant tax payments.
As for residency, it is not necessary to live in Spain: you can buy a home even if you spend only a few days a year in the country. However, in the case of non-residents, the interest rate is higher.
If you want to know how to get a mortgage in Spain, today at Sonneil we have prepared a guide with only 6 steps to get your dream apartment on the beach. 🏖
1. Prepare the appropriate documents for the bank. The mortgage should be signed with the bank that offers you the best guarantees. To do this, prepare all the necessary documents such as your payment slip and the ones concerning income, existing liabilities and the taxes you pay. An official translation of each and every document is required, such as a copy of your passport or your income sources if you work abroad.
2. Receive the offer. The bank will then make you a personalised offer based on your situation. Please note that the first offer is not always the best.
3. Open an account to make your mortgage payment.
4. Compare and accept the offer. It is time to compare counter-offers with your bank.
5. Sign the final mortgage documents.
6. Contract additional services, such as insurance.
Do you want to have your place reserved in the Mediterranean paradise? At Sonneil we offer you apartments on the beach and we accompany you through the whole bureaucratic process, so that you don’t feel overwhelmed.
Our developments are designed to help you find the home you need, and all you have to worry about is enjoying yourself.
If you are thinking about buying property in Spain, it is important that you know what taxes are paid when you buy a house. Although the amount of taxes in Spain varies depending on the price of the property, it is advisable to take this into account before you embark on a purchase.
After all, the good life also has its formalities.
Buying property in Spain: taxes
They are not many, I promise. But they are very necessary. If you wonder how to buy real estate in Spain, start with getting familiar with this. These are the taxes that you will have to pay when buying property in Spain.
The Value Added Tax, or VAT (IVA, for its acronym in Spanish), is an indirect tax on consumption.
In 2020, the tax rate is 10% of the purchase price of housing and 21% for commercial properties and plots of land. A 21% rate is also applied if a certain number of properties is exceeded and not purchased in lots. For example, if you buy a house with two garages and a storage room, you will pay 10% of the overall price. However, if you add an extra garage or storage room to that lot, that property will be taxed at 21%.
This is a national tax, so it is the same wherever the property is located, with the exception of the Canary Islands, where it is 6.5%.
If a deposit is paid before completion of the sale, said deposit is also subject to VAT applicable at the time the deposit is paid.
If you are buying propery in Spain with a bank mortgage, then you will have to file this tax. It taxes the signature before a notary public and the inscription of the ownership of a property in the Land Registry. Good news: since 2018, this tax is paid by the bank that grants the mortgage. The tax rate varies depending on the autonomous community. In the Valencian Community, for instance, it is 2% of the price of the property.
Real Estate Tax
As they say, he that would have the fruit must climb the tree.
The Real Estate tax (or Property tax in Spain) will be paid once you own the property. It is a local tax that is levied on the ownership of a property, whether you are a resident in Spain or not. The tax rate varies according to the region where it is applied and is calculated based on the cadastral value of the property. The cadastral value is the administrative value attributed to the property, based on the value of the land and the construction. More good news: the cadastral value is usually lower than the price of the property.
Non-Resident Income Tax. Form 210.
When it comes to real estate in Spain and knowing what taxes are paid when buying propery, non-residents should take into account how to pay the Non-Resident Tax. This tax varies depending on whether the property is rented or not.
If you plan to rent the house and, therefore, receive an income, you must declare it and pay taxes on this income. The tax varies depending on to the circumstances. In many cases, you simply pay a tax of 25% of the income from renting the property.
If you are not planning to rent it out, the tax is paid according to the value of the property (25% of 2% of the cadastral value).
If you are a foreigner but resident in Spain, you will pay this tax according to the income obtained during the year.
Capital Gains Tax on property
Whether you are a resident or a non-resident, if you own property in Spain you must present the Capital Gains Tax on property. You will submit it as long as:
The value of the property exceeds 700,000 euros and the result is payable. The value of the property exceeds 2,000,000 euros, although the result is negative.
If it is your habitual residence, you only have to file it if it exceeds 300,000 euros.
Watch out!: The Capital Gains Tax on property in Spain changes on a regional basis. For example, in the Comunidad Valenciana, the minimum is 600,000 euros. Check out the corresponding legislation.
Come on, there is less left!
(Btw, maybe you are wondering “Is it good time to buy property in Spain?”. Yes, it is. Check this out).
Costs when buying property in Spain
In addition to the taxes you pay when buying property in Spain, it is also good to consider the additional costs that may arise.
Once the notary public has signed the deeds, it is advisable to register the purchase in the Land Registry. The cost of this procedure also depends on the price of the property. It usually ranges from 400 to 650 euros.
In the event that there is a mortgage, the bank that grants it is the one responsible for the payment.
Leave it to the experts. When it comes to drafting and signing the deed of sale, the work of the notary public is essential to ensure that it is well done. Some of the tasks of the notary public are to confirm the encumbrances on the property (if any), to check the distribution of the costs of the sale, to attest to the authenticity of the document…
Fees are calculated based on the price of the property and the complexity of the deed, the length, the number of copies, etc. If there is a mortgage, the bank that grants it is the one responsible for the payment.
When transferring money from abroad to Spain, transaction costs may arise, especially if you use a currency other than the Euro. The help of a currency exchange specialist can reduce these costs.
Please note: the bank also charges for issuing the bank transfer to pay for the property. Be sure of the costs!
Don’t be afraid of the fine print. You can count on the services of a lawyer who specializes in these types of contracts. The lawyer may represent you before the notary public, carry out procedures on your behalf at public institutions, handle your application for a Foreigner Identity Number (NIE), etc. Hire the services of a lawyer before signing any type of document or paying deposits.
They are independent professionals, so their fees are not regulated and usually vary.
When you apply for a loan at a bank, you will probably be charged a commitment fee. This is basically what you have to pay to the bank for applying for the mortgage. This amount is deducted from the money you are loaned and is usually between 0.25% and 3.00%. It is important to know that not all banks charge this fee. And, if they do, you can negotiate the percentage.
In addition to the commitment fee, we must not forget the life insurance and the home insurance, which will be deducted from the amount of the mortgage.
Keep in mind that you will have to pay a property valuation. Depending on the entity that values the property and the valuation of the property, this procedure usually costs between 250 and 800 euros. The valuation will be valid for up to 6 months from the date of issue.
Good! Now you know what taxes are paid when buying a house in Spain. Don’t let these formalities bother you. With the help of professionals, you will carry them out in the blink of an eye.
Buying a property is the biggest
investment most people will make in their lives. Buying one abroad is an even
bigger undertaking as it involves navigating a foreign legal and financial
terrain. It is normal to feel daunted by the task, but like anything in life,
the better prepared you are going into it, the more likely you are to make a
success of it. That being the case, Sonneil has compiled a list of important
things to consider when buying a house in Spain.
Location, location, location
A house gains in value if it is
located in an area with high
quality schools and with good communication and transportation routes to the main
urban centers, so be sure to ask about these local amenities. It’s a good idea
to ask about future development plans pending approval as these may affect the
house or its surroundings, and find out as much as you can about how much other
properties in the area have sold for recently.
Viewing the property
When visiting the your prospective
property purchase take note of things like the orientation of the house,
ventilation of the bathrooms and kitchen, the state of the electrical
installation, the arrangement of partitions and doors and the ambient noise
levels outside. Take photos and write down your observations in a notebook to
better remember the property after you leave. Ask the seller about the
building’s energy efficiency rating. Choosing a home with an A rating in terms
of its energy efficiency means an estimated saving of 89% compared to an F
rating, thus allowing you to save money while you save the planet.
The purchasing process
The deposit agreement
Once you’ve chosen your new home
and are ready to start the process of buying it, then the legal and financial
considerations come to the fore. This starts with the signing of the deposit
agreement. The deposit is usually around 10% of the cost of the house. Once the
agreement is signed you take on the rights and responsibilities of a buyer. If
you later decide not to go through with the transaction, you will lose this
deposit but if the seller cancels the sale, they will have to return the
deposit to you.
The title deed
Next is the signing of the title
deed. This part of the buying process must be done in front of a notary with
both the buyer and seller present. The deed must contain a description of the
property as well as explaining any mortgages or charges on the house, the final
sale price agreed and how it will be paid, plus the taxes and expenses related
to the sale.
Taxes and other charges
The main taxes to be paid are the
property transfer tax (“Impuesto de Transmisiones Patrimoniales” or
ITP) and VAT. Other expenses include notary costs, the payment to add your name
to the property register and any costs related to the mortgage.
In the end, the total taxes,
charges and expenses represent around 8% to 13% of the purchase price,
depending on the autonomous community (Spanish region) in which you are buying.
If you have reached this far in the
process, then congratulations, you are the proud owner of your own Spanish property!
Making the move to Spain is a dream come true for many people. However, it comes with its logistical challenges. This is especially true for families, for whom the extra consideration of schooling and activities for their children must be taken into account. This being the case, Sonneil has composed the following guide to help navigate the tricky terrain of settling down in Spain with a family.
Once you’ve made the move to Spain with kids, it’s important to try integrate into the community as quickly as possible. As anybody who has ever moved to another city – or even just another neighbourhood – will know, the process of integration that follows is usually driven less by the parents and more by the children.
Starting a new school, with all the socialisation and extra-curricular activities that go with it, is the most guaranteed way of integrating the entire family into the new environs.
The exact same applies for families making the move further afield. And while a move to Spain might be more daunting overall than moving within the UK, parents will be relieved to know that despite some differences in culture and, of course, language, the Spanish education system is broadly similar to that of the UK.
Spanish education system
Early Childhood Education
Pre-school in Spain is divided broadly into two stages, based on the child’s age: nursery schools (guarderias) cater for children from around three months up to three years old, while kindergarten or infant schools (escuela infantil) are for children from three until six. The first cycle of pre-school is not provided for by the state, hence parents have to pay out of their own pocket.
This will cost in the region of 300 euros a month.
The good news is that after that the option exists to avail of Spanish state public schooling which is free for the rest of your child’s school-going years, although private school options are also available. Though pre-school is not compulsory, it’s common: The OECD reports that Spain has nearly full enrolment in early childhood education, with 95% of 3-year-olds and 97% for 4-year-olds enrolled.
It is worth noting that the availability of pre-school in Spain is not always widespread; it depends on the area, particularly for state schools, as well as the demand. Often it can be quite difficult to find a place for your child.
Placing your infant in a nursery not only ensures a safe environ for them if you need to go out to work, it will also provide a deep immersion in Spanish culture and language from the earliest age.
It is not uncommon to see babies as young as four months at guarderias. Because of the country’s sizeable expat community, there are English language nursery schools in Spain in some areas, particularly in the major cities or the Costas and Islands.
Nurseries generally offer low-cost childcare, rather than formal education.
There are also private, fee-based nurseries and these generally cater for children aged two to six. Sometimes these are attached to primary schools, in which case children can just transition into their formal education.
There is a reasonable amount of flexibility in terms of hours of attendance and parents can choose mornings, afternoons, full days or just a few days per week. Schools sometimes also provide transport between home and schools.
The first step is to evaluate the type of nursery to choose. There are public and private nurseries. However, choice is often limited by availability, meaning that if all the local state-funded day care centres are full, there will be no option but to go private.
In the case of public nurseries, the prices that have to be paid depend on the parents’ financial circumstances, meaning many families pay considerably less that the 300 euros-a-month maximum rate.
Unlike with nurseries, pre-school, which begins at age three, is provided free of charge by the state. During this cycle, children are introduced to the subjects that they go on to study in primary school. As such, pre-school teachers must hold a master’s degree with a specialisation in Early Childhood Education or an equivalent degree.
In terms of educational outcome, no rigid targets are set in pre-school with the focus generally being on project-based learning.
Most pre-schools offer an adaptation period at the start of term and it is not uncommon for school to last only 30 minutes on the first day. It then slowly builds up to the full day which, in most, but not all regions, is from 9am until 2pm. Be sure to check the timetables of the schools where you are considering moving to.
Both nurseries and pre-schools in Spain must comply with a series of hygiene, health, safety and accessibility conditions that are required in order to obtain an operating licence. In the case of pre-schools, their facilities must meet a series of requirements including an independent entrance from outside, an area of two square meters for each student per class, an accessible toilet, an exclusive playground with a minimum area of between 60 and 75 square meters, and adequate space for the preparation of food and toilets for the staff separated from those of the students.
Pre-school is highly recommended, particularly if your children are going to continue with a state education. After one or two years they will be integrated into the local community and will have learnt Spanish in preparation for primary school.
Primary education in Spain is compulsory and free. In general, the students will join the first year of primary education at age six and leave at age 12.
You can get a list of the state schools in your Spanish town from the Town Hall or Local Education Centre.
You can register your child with a state school once you and your family are registered as residents at the local town hall. The local authorities will require the following documents:
Proof of residence (rental contract or property deeds)
Passport or residence card
Child’s birth certificate
Proof of the child’s vaccinations and a medical certificate of health (in some areas)
Although the performance of schools in Spain is not publicised, each area has a central office where you can ask which schools in your area are performing the best.
Try to organise your move to Spain before the next school year begins, so they can begin at the start of the semester. In fact, most schools in Spain confirm students’ attendance for the following school year by March.
If you are moving to Spain after your children have started junior school they might need additional Spanish lessons and, depending on their age, may be put into a class with children a year younger, to enable them to catch up.
Primary schools in Spain teach the Spanish language (Castilian) maths; science and social science as well as foreign languages, arts education and physical education. In autonomous regions with their own languages – like Catalonia/Valencia (Catalan) or the Basque region (Basque) classes will also be taught in those languages.
In these areas students must study the Co-official Language and Literature, however, depending on the age at which your child begins their schooling in Spain, they may be able to seek an exemption from sitting tests in the local language.
As for the schedules, these can vary from school to school. However, usually they start around 8:30/9 am and end around 5 pm, with a two-hour break between 1:00 pm and 3:00 pm.
Educación Secundaria Obligatoria (ESO) is free and compulsory education that consists of four academic courses usually taught between the ages of 12 and 16 years old. As is the case in the UK, children then have the option to leave school entirely.
Those who choose to remain on in education now enter the Baccalaureate stage that goes from 16 to 18 years old and prepares young people to access university or vocational training at a higher level.
It is taught in the same institutes as the ESO and consists of three different modalities (sciences, arts and humanities and social sciences) that are chosen according to what the student wants to study in the future.
There are three types of secondary school in Spain: public, private and Concertado schools.
As is the case with primary schools, state-funded secondary schools are financed and managed by the government with the help of local administrations in each area. Most of these centres teach all levels of education – pre-school, primary, and secondary – although some centres delegate the higher cycles in public institutes.
They have limited places and in order to access them you have to meet a series of requirements established by the Central Administration (proximity to housing etc). Therefore, parents can submit an application to the school of their choice, but acceptance will depend on whether their circumstances meet the established criteria.
These are private schools that are subsidised to a great extent by the Central Administration. They have freedom of management but must meet certain conditions established by the government such as a limit on the number of students per class, dates, admissions, etc.
You can expect to pay in the region of 100 – 200 euros a month for a place in a concertado school and the common perception is that the education received in them is better than in public schools.
As in the case with private primary schools, these are financed exclusively by the parents of the students. They have complete freedom of management and some freedom of curriculum. In private schools, you have the option of either Spanish speaking schools or bilingual schools which have an emphasis on English.
Prices for private schools differ between schools, but you should find the fees lower than those of British private schools.
In Spain International schools generally have smaller class sizes and will work to the English curriculum, helping your child settle back into their studies. Students also learn Spanish as a foreign language. You may find an international school more appropriate for your older children.
As international schools are usually based in large towns, you may need to consider the costs and convenience of travel to and from the school.
If you have moved from the UK to work for a Spanish company, one of the most notable differences will be the high number of paid bank holidays there are compared to back home.
Indeed, while UK companies generally offer 28 days paid leave – six more than in Spain, when you include bank holidays the total number of paid vacation days in Spain jumps to 36 – which is eight more than the UK.
This is due to the plethora of religious, regional and national observances in Spain. The national holidays are New Year (January 1), Fest of the Epiphany (Jan 6) Good Friday (March or April) May Day (May 1), Feast of the Assumption (August 15), Spanish National Day (October 12), All Saints (November 1), Constitution Day (December 6) and Feast of the Immaculate Conception (December 8) Christmas (December 25).
On top of these you can expect another four days off thanks to regional holidays, depending on where you live. On occasions when a public holiday falls on either a Tuesday or Thursday, the common practice in Spain is take the Monday or Friday off, thereby creating a four-day weekend.
All of this means more time for families to spend together, providing a wonderful opportunity to explore the local area or region.
Golden Visa Law (Law 14/2013) allows non-EU investors to apply for Spanish residency. Its people and culture, the joy of life, its unrivalled climate, prices bottoming out… all of them are some of the reasons why Spanish real estate has become an attractive choice for investment, whether for sand-sea lovers or a professional investors. If you are a non-EU citizen and you are considering investing in Spanish real estate, the following information is doubtlessly of your interest. This new law allows you to reside in Spain with no requirement for minimum stays. The only condition is that you had visited Spain at least once in the year to renew the Visa. Read on to learn more about the requirements and conditions of the so-called “Spanish Golden Visa”.
How much do I need to invest in order to get this visa?
In order to get this visa in return for an investment in real estate, you need to spend a minimum of €500,000 (tax-free) on a property purchase. You can buy one real estate property or more than one. The €500,000 must be mortgage-free. Above that half million euros there is no limit to debt financing. There are also other assumptions related to different sorts of investments. Click here for further information.
What legal requirements do I need to meet?
Acquisition of the real estate property/ies and proof of the investment, through a Registry of Property certificate or copy of the acquisition public deed, of at least €500,000 per applicant.
Not to have entered or stayed illegally in Spanish territory.
Not to have been refused entry in any of the Schengen countries.
The investor applicant must be of legal age (18-years-old or over)
The investor must not hold a criminal record whether in Spain or in the previous five years where he has resided.
Have public or private health insurance authorized to operate in Spain.Have sufficient financial means to support both himself and his family whilst in Spain.
How long is the visa valid? How long does it take to be processed?
Once the investor residency visa have been issued, the investor will be entitled to reside in Spain for a one-year period. If the investment is maintained, the visa will be renewable for another 2 years after that. The maximum total duration of residence permits is 5 years.
Visa applications are processed within approximately 20 working days.
What you get:
Your spouse and children up to 18 years can be included.
You have access to move within the Schengen visa area of Europe for a maximum period of 3 months per half-year.
You can reside in Spain for up to 5 years, as long as the investment is maintained.
What you don’t get:
This law allows to apply for Spanish residency but not for a work permit. You can apply for the work permit once the residency has been obtained in order to pursue your profession or to work in Spain,
If you are interested in investing in Spain and applying for the Golden Visa, Sonneil will provide assistance with Golden Visa processing and will help you in finding the best investment. If you need further information please contact us! We will be pleased to help 🙂