Buying a home is one of the most important financial decisions in a person's life, especially when it comes to taking out a mortgage. Before taking the step and formalizing the operation, you must take into account what documents you need to present, verify that the house has no charges, how much savings you must have, the amount you will have to pay each month and for how many years you will pay the installments.
1. What should I ask the real estate agent?
If the house is second-hand, it is convenient to know why it is being sold, if it has the certificate of occupancy and energy certification, if it has pending economic expenses or if the basic supplies are registered. It is also important to ask if a technical inspection of the building (ITE) has been carried out.
2. What steps should be taken when it is clear that you want to buy a house?
The first step is to request a simple registration of the home in the property registry. It is a document that contains all the information about the property, even if there are expenses or debts.
The next thing is to sign the deposit contract, it is a private contract that is used to reserve the home that you are going to buy. At the time of signing, a down payment is delivered, which is then deducted from the final purchase price. It is advisable to sign it before the notary.
The next step is to seek financing for the purchase of the house, a good option is to take out a mortgage loan. Currently, it is practical to analyze the market to know what kind of offers financial institutions offer.
The last step is to sign the purchase contract, it is an agreement between the two parties, where the seller agrees to deliver the home to the buyer for a certain amount of money. This Agreement imposes a number of obligations and rights on the parties and there may be consequences if either party breaches these obligations and rights. The buyer usually chooses the notary with which he wants to sign his contract of sale.
3. How do I know if the house I want to buy has debts?
The main thing would be to request the simple note of the property in the Land Registry. It will allow you to know the status of the home in terms of mortgages, seizures, charges or fiscal terms. Remember, if there is a debt on the house when you buy it, that debt is transferred to you.
You must also make sure that you are aware of the community payments (monthly fees, spills...) for which you can request a certificate; and make sure you are up to date with municipal taxes (IBI, waste fees, recycling fees...) To do this, you must request a receipt or proof of payment.
4. How to know if the house has an energy certificate?
Since June 1, 2013 it is mandatory to present the energy certificate in Spain to be able to rent or sell properties. Royal Decree 235/2013 establishes the obligation to present the energy certificate and the responsibility of obtaining this energy certificate is the owner of the home.
5. How much money should I have saved?
In general, it is necessary to have savings of between 30-35% of the value of the house. In general, bank financing is up to 80%, so the remaining 20% is paid with own funds; the remaining 10-15% will be used to pay taxes (VAT if it is a new house and ITP if it is a used house) and other expenses related to the sale.
6. What is the monthly fee?
The answer to this question depends on the price of the house and the size of the mortgage, as well as the length of the loan. In order not to put your financial health at risk, it is recommended to estimate your income minus the monthly expenses of the owners who will buy a new house. This way, you will see how much monthly margin you have. In general, it is recommended not to pay more than 40% of your income.
7. For how many years is a mortgage paid?
It all depends on how much you are signing the mortgage for and how much you can repay during that period. In general, the longer the term of the contract, the lower the monthly payment, but the higher the interest. Most financial institutions allow contract terms of up to 30 years, as long as the loan holder is not older than 75 when the loan is repaid.
8. Up to what age can I apply for a mortgage loan?
There is no specific legal limit to determine the maximum age at which a mortgage loan can be requested. However, in general, the age limit for the repayment of mortgage loans is set at 75 years. Taking into account that the minimum term of the loan is 10 years, the maximum age to apply for a mortgage is 65 years.
9. What to choose, variable mortgage or fixed mortgage?
This is probably one of the most frequently asked mortgage questions in recent times. In fixed-rate mortgages, customers always pay the same installments from the first month to the last, even though the interest rate is higher than that of variable-rate loans, depending on the development of measures such as the Euribor. The daily rate is now above 2.4%, the highest since 2009, while the provisional average for September was more than 2%, the highest since the end of 2011.
Since 2009, more than 1 million households in Spain have contracted a fixed mortgage, which represents a quarter of the total credit. Specialists insist that there is no perfect mortgage and that the choice will depend on the specific circumstances of each consumer, as well as factors such as their personal economic situation or how long they plan to pay off the loan.
10. What expenses must I assume to formalize the mortgage and the sale?
The expenses of the sale include notary, property registration, management, VAT or ITP, depending on whether it is a new or used home.
This fee must be added to the mortgage loan. If in a contract without commitment, it is the principal plus the interest of the entire mortgage, plus the expenses of the insurance of loss, the expenses of maintenance of the account and the appraisal that corresponds to you to pay. It is probable that the entity assumes some expenses, such as the simple note, the registration or the agency.
11. What documents will the bank ask me for?
The NIF, the last income statement, the last three payslips, the working life, the movements of the bank account. There are many documents to collect before applying for a mortgage. It has happened to the self-employed many times that they also require the most recent quarterly VAT and personal income tax returns.
12. How long do I have to sign the mortgage once I have it approved?
Once the financial institution has approved the operation, choose a notary to agree on a date to sign and they will advise you at no cost.
Remember that, by law, once the FEIN (document containing the mortgage conditions) and its annexes have been signed, you have 10 or 14 calendar days in Catalonia to reflect on and review the mortgage conditions, before signing before a notary. At the time of the advice, the notary issues a certificate of conformity for the signature and in it indicates when the contract can be signed. He must observe at least adequate reflection time.
13. Can I repay the mortgage early?
The answer is yes. Loans can be partially amortized (you pay only part of it, you can shorten the term of the mortgage or lower your monthly payments) or fully amortized (pay the mortgage in full). Most banks establish a commission for early repayment.
After the entry into force of the mortgage law, the maximum penalty that the subject can apply depends on the mortgage: in a variable, the limit is 0.25% of the amortized capital if the payment is made in the first three years of the loan , if done in the fourth or fifth year 0.15% during the period. In the case of a fixed mortgage, the maximum commission is 2% if it is paid in the first 10 years of the mortgage and 1.5% thereafter.
14. Can the bank mortgage be changed?
Yes, the process is called surrogacy. In the first years of the loan term, subrogation is usually more profitable to save more interest, and before making changes, it is advisable to check the cost of subrogation, analyze multiple offers and take into account all the conditions, not just the type of interest.
15. What happens to the mortgage if the owner dies?
If the mortgage holder dies, the debt passes to his heirs. In this sense, it is detailed that "the heirs must provide documents (will, testamentary certificate, declaration of heirs...) that prove the situation, and they will receive a certificate indicating the status of the mortgage."
Next, they must “provide a notarized certificate of acceptance and division of the inheritance in which all the heirs who accepted and distributed the inheritance by common agreement are listed, noting the percentage, amount or fraction corresponding to each one of them. Likewise, they must provide a liquidation of the "inheritance tax". Tax that depends on the CCAA.
After the delivery of the documents, the bank "will issue a response clarifying the scope of the responsibility and the subrogation of the heirs of the deceased debtor. If a life insurance policy is taken out that covers all or part of the debt with the mortgage, in case of death, you have to make the payment, it is handled by the insurer”.
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