In the rarest of cases, buyers bring the money with them to pay for a property in full. It usually comes down to financing. This can be done via the local bank abroad or via a Spanish bank.
The Spanish mortgage law has made real estate financing via foreign banks more complicated for the institutions themselves. In order to protect the customer from abusive practices, it stipulates that various documents and conditions must be transmitted electronically between the financial institution and the responsible notary. The problem here is that the bank must have the necessary technical requirements, which is almost never the case with banks abroad.
Financing as a non-residentIn any case, this option is usually only available to non-residents. So that they can also obtain a mortgage for their Spanish property from the bank of their place of residence, they often resort to so-called indirect financing.
In this case, a mortgage-free property at the place of residence can be mortgaged and the loan amount used to purchase a Spanish property.
The financing of a property in Mallorca, for example, takes place entirely abroad (in Spain). The mortgage is then also entered in the foreign land register. The resulting loan is used to purchase an unencumbered property. No further provisions then need to be observed at the notary appointment in Spain.
Financing as a residentFinancing via a Spanish bank, for which you must or should become a resident, is more advantageous. This is particularly useful in cases where the property to be financed is the later main residence (vivienda habitual). In this case, the banks will finance up to 80 percent of the market value. The customer can cancel the free mortgage at any time or switch banks.Documents for the application
The following documents are required to apply for a mortgage in Spain: The land register extract (nota simple), which is normally provided by the seller or the estate agent. If it is not (yet) available, the application is made electronically at the land registry. The last income tax declaration (IRPF) is also required. Most Spanish banks prefer the Spanish tax declaration. If you have not been resident in Spain for a full year and do not yet have a Spanish tax return, it may be necessary to have the last foreign tax return translated into Spanish before submitting it. Proof of salary is also required. If you work as an employee in Spain, proof of the last three months is sufficient. If you are self-employed, the last three quarterly statements are usually required (Modelos 130 and 303).
Procedure of the real estate purchase
In brief, the procedure is as follows: You sign a pre-emption agreement with a right of rescission; this is essential for many mortgages. You then submit these documents to your bank. The respective notary will receive the conditions for granting the mortgage electronically. At an appointment, you discuss these with the notary and sign the public deed (acta previa). Finally, you meet again with the seller and a representative of the bank at the notary's office to sign the deed of sale and mortgage deed.
Usually, an authorized agent proposed by the bank and authorized by you will handle the payment and any taxes due. Despite the option of bank transfer, real estate sales are still processed by so-called "bank check". The bank brings this to the notary appointment. The self-financed portion of the purchase price, the amounts for taxes, notary and land register should have already been received in the Spanish bank's account by then.
Ceremonial act
The notary appointment is quite ceremonial: After the sellers have signed the purchase contract, they briefly leave the room while the buyer signs the mortgage deed. Finally, the bank or the bankrupt company hands the bank check to the seller and the buyer receives the keys. The process ends for you with the receipt of the original purchase deed after three months at the latest, during which time the land register entry is made. As proof, the buyer first receives a copy of the purchase deed (copia simple) to re-register the supply.
