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The key to a successful Spanish property purchase …
Many people enter into a property purchase / investment without knowing the full story. When I worked in the real estate industry in Spain, I often overheard our poor telesales girls trying to calm down clients after they had found out that their purchase was not as straight forward as they had originally thought.
I worked in close proximity to the telesales department which made it very easy to listen in and I often found myself doing just that with the clients that were REALLY annoyed. I would hear anything from shouting and swearing, even crying! I have to say that these people just did not know what they were doing from the start. There was one lady in particular, who for obvious reasons I cannot name. She made me cringe inside whenever she would call the office. She had bought an off plan property in Calahonda on the Costa del Sol in Spain and had since found out about certain fees and charges that she hadn't bothered finding out about in the beginning. Now, I am fully aware of the fact that a lot of people have been 'taken for a ride' by Spanish real estate agents, especially on the Costa del Sol. However, I recall one conversation in which the lady in question broke down on the telephone and told a salesperson that she didn't actually know the purchase price of the property and if she did, that she would never have bought it in the first place! It's clear to me that some people are far beyond help. But for the people who take the time to make sure their affairs ARE in order, I have listed below the charges that any prospective buyer or investor should be aware of when purchasing a property in Spain: • Firstly, you should remember that the real estate agent's fees go on top of the purchase price and are typically higher than in the UK. You can expect a figure anywhere between 5 - 10% of the total purchase price. • Then there's the IVA!! This is the Spanish equivalent of VAT which currently stands at around 7%. This goes on top of the purchase price. • Mortgage costs will set you back 2% of the purchase price. • 1.5% will go towards lawyers costs and you need to allow for around 1.5% for 'other fees' including notary fees and the valuation fee. A bank will appoint a valuer for mortgage purposes and they will require you to pay this fee up front which is usually around 500 Euros. • There will be redemption fees for doing so, and these will be between 0.5 – 1.5% Many people enter into a property purchase / investment without knowing the full story. When I worked in the real estate industry in Spain, I often overheard our poor telesales girls trying to calm down clients after they had found out that their purchase was not as straight forward as they had originally thought. I worked in close proximity to the telesales department which made it very easy to listen in and I often found myself doing just that with the clients that were REALLY annoyed. I would hear anything from shouting and swearing, even crying! I have to say that these people just did not know what they were doing from the start. There was one lady in particular, who for obvious reasons I cannot name. She made me cringe inside whenever she would call the office. She had bought an off plan property in Calahonda on the Costa del Sol in Spain and had since found out about certain fees and charges that she hadn't bothered finding out about in the beginning. Now, I am fully aware of the fact that a lot of people have been 'taken for a ride' by Spanish real estate agents, especially on the Costa del Sol. However, I recall one conversation in which the lady in question broke down on the telephone and told a salesperson that she didn't actually know the purchase price of the property and if she did, that she would never have bought it in the first place! It's clear to me that some people are far beyond help. But for the people who take the time to make sure their affairs ARE in order, I have listed below the charges that any prospective buyer or investor should be aware of when purchasing a property in Spain: • Firstly, you should remember that the real estate agent's fees go on top of the purchase price and are typically higher than in the UK. You can expect a figure anywhere between 5 - 10% of the total purchase price. • Then there's the IVA!! This is the Spanish equivalent of VAT which currently stands at around 7%. This goes on top of the purchase price. • Mortgage costs will set you back 2% of the purchase price. • 1.5% will go towards lawyers costs and you need to allow for around 1.5% for 'other fees' including notary fees and the valuation fee. A bank will appoint a valuer for mortgage purposes and they will require you to pay this fee up front which is usually around 500 Euros. • There will be redemption fees for doing so, and these will be between 0.5 – 1.5% So, now you must start to think about finance (should you require it). In order for you to be able to obtain a mortgage in Spain, you need to be able to provide proof of your income. You will also be required to open a Spanish bank account in order for you to pay the monthly mortgage instalments – this is very easy to set up and all that is required is that they have a copy of your passport and proof of address. Typically in Spain, as a non resident, you will be able to borrow up to 70% of the value of your chosen property. Spanish mortgage providers will offer mortgages of up to four times your annual income. You also need to be aware of other costs associated with buying a Spanish property when considering how much you want to spend, as this can be as much as 12% in addition to the purchase price. All of the above will apply to any Spanish property purchase so please remember these important facts. As I mentioned earlier, it's not just cut and dry. Buying a home in Spain isn't easy, but if you are armed with the correct information and you are prepared both financially and mentally, it can be made a whole lot easier!
Written by: James Hughes
From: http://www.ritebuy.co.uk
Date written: 25/05/2006
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