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PROCESS OF BUYING A PROPERTY IN COSTA BLANCA

 

First of all it is important to mention that it is NOT necessary to be resident in Spain to buy a property and no special documentation for it is needed. The steps to buying property in Spain are simple. The requirements are easy by the hand of your real estate agent, who can assist with the purchase, opening a bank account and obtaining a NIE number (Tax Identification Number for Foreigners).

 

Purchase cost of a property

When you buy a property in Spanish territory and in particular on the Costa Blanca, you should always count with a percentage of between 11% and 12.5% of the purchase price depending on whether the property is acquired as "second hand" or "new development".

 

-SECOND HAND: Approximate 11% of the purchase price if the property is acquired as "second hand" (from particulars). Expenses generally break down as follows:

  • 10% ITP (Transfer Tax)
  • Notary Fees
  • Property Registry
  • Administration Fees (gestoría)

 

-NEW BUILD: 12.5% approximate expenses on the purchase price if the property is acquired as "new build". Expenses generally break down as follows:

  • 10% I.V.A. (Value Added Tax)
  • 1.5% A.J.D. (Stamp Duty)
  • Notary Fees
  • Property Registry
  • Administration Fees (gestoría)

 

In both cases you can opt for the assistance of a lawyer to accompany throughout the process, whose fees are not included and may vary depending on each case.

The fees of the Spanish agencies when selling a property, are generally between 2.5% and 5%. This percentage will normally be included in the final sales price.

 

Processing & Mortgage fees

To apply for a mortgage it’s vital that you first open an account in the corresponding bank. Non-residents may qualify for a mortgage up to 80% on the sales price object of the purchase (in some cases 100% if the property is from a bank). The required documentation is as follows:

  • Photocopy of passport
  • last 3 payslips
  • Tax-Income of the previous year
  • Heritage

 

The employees will need to provide the following documents:

  • Statement, (the last two years)
  • Documentation of acreditation of payed taxes over the past two years

 

The Bank may ask you to extract your bank accounts abroad, over the past two years.

 

Valuation: The bank where you decide to open an account and process your mortgage, will carry out the appraisal of the house. The cost of an appraisal is about 300 €, and the final loan amount will be directly related to the value of the appraisal.

 

Expenses incurred by the mortgage: These are about 2.5% of the loan. Expenses generally break down as follows:

  • 1.5% of the mortgage liability (significantly higher than the loan value)
  • Valuation
  • Notary Fees
  • Property Registry
  • Administration Fees (gestoría)

 

Other expenses related to the mortgage:

  • Arrangement fee: agreed by the bank charging a fee, which is usually a percentage of the amount borrowed capital.
  • Multiriesgo Home Insurance: under the law 2/1981 the holder of a mortgage loan is obliged to take out fire insurance (or damages) on the housing of the mortgage. It is a insurance that covers the continent, not the content of the housing, which can be ensured expanding the insurance.

 

Chronology of the buying process, once selected the property

-Property reservation. Signing of the reservation document and payment of a signal, normally ranging between € 3,000 and € 6,000 depending on each case. In exceptional and by mutual agreement between the buyer and seller in cases they can agree larger amounts of reserves. In case the buyer reject the purchase of the dwelling he will lose the quantities delivered, in case it is the seller who decides not to sell, he must refund double that amount.

 

From the current moment three possible scenarios are faced:

-1.Situation - Capital available immediately. A relatively short term is established for signature at the Notary (usually one or two weeks). The operation is prepared in the Notary, all checks are made, funds are prepared and signed within the deadline.

 

-2.Situation - Capital available but I want more time. A term within 4 to 6 weeks is established for signature at the Notary. In these cases it is recommended that a Purchase-Sales contract is signed, delivering 10% of the value of the dwelling (minus the reservation payment previously made). This payment is certainly a guarantee for both parties. The buyer asures himself not to lose the housing being purchased, and likewise the seller is assured that the purchase-sale continues. The operation is prepared in the Notary, all checks are made, funds are prepared and signed within the deadline.

 

-3.​Situation - I need funding. The study of financing usually requires 2 to 4 weeks from the time all the requested documentation was provided. In many cases the documentation is to be translated, which lengthens a little more the delivery process of the documentation. Once the property being purchased has been valuated and the mortgage granted, a deadline is established for signing.

  • If the signature is immediate, the operation is prepared in the Notary, (in combination with the Bank), all checks are made, funds are prepared and signed within the deadline. 
  • If the signature is delayed a few weeks, it is recommended to sign a Sales-Purchase contract, delivering 10% of the value of the housing (minus the reservation payment previously made). The operation is prepared in the Notary, (in combination with the Bank), all checks are made, funds are prepared and signed within the deadline.

 

The Buying-Sales operation is completed, once you sign before a notary. At that moment you will be given a “Copia Simple” Copy of Title Deeds and the keys to the house. Within approximately a month your property will be registered at the Land Registry and you will be delivered the Final Original Title Deeds.

 

Once the property is in your name, it is recommended that a specialized company performs all the necessary arrangements with the supplyers of Electricity, Water, Solid Waste Collection, registration in the corresponding municipality, Gas connection, registration in the Owners community, etc...

 

AREA Costa Blanca will be happy to accompany you throughout the whole process. Our experience, is your warranty.

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