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When buying a property in Spain the following costs are involved. As a guide line you should add up to 10% to the purchase price of the property to cover this. IVA. IVA is similar to the English VAT. It is charged at the rate of 16% of the total construction price.
Stamp Duty. Called 'Plus Valia': sometimes charged, sometimes not.
Government Tax. This is at a rate of 7% of the declared value.
Notary Fees. Notary fees are charged according to a fixed scale and are approximately 250 Euros. This is due on signing of the Title Deeds.
Register Fees. This is at a rate of 7% of the property value.
Mortgages:If you are taking out a mortgage the administration costs of mortgage lender also need to be taken into account. The set-up fee could be around 1,500-2,500 euros or up to 2% of the mortgage.
Based on EURIBOR (the most common reference rate for calculating mortgages in Spain, currently at 2.3% + 1.25%), compared with rates currently available in the UK, based on the considerably higher LIBOR (4.75% + 1.25% and rising). As long as Euribor is lower than Libor, the cost of money will be cheaper in the Eurozone.
So compared to the UK, it costs relatively little to finance a property in Spain. Repayment times for Spanish mortgages are usually far lower (average 10-15 years) than those in the UK. But it takes quite a time for mortgages to come through; so calculate well to not get into any difficulties with your financing.
As you would anywhere, always shop around for the best deals and ask what the effective rate is including commissions and fees. There are various types of mortgages available: • Fixed interest rate mortgage
• Variable interest rate mortgage
• Mixed interest rate mortgage
• Fixed repayment instalment mortgage
Seek advice from a Spanish lawyer to establish which type of mortgage best suits your interests. They can also advise you on whether to take out a mortgage in sterling or euros, as there are various factors to consider in this decision. You could lose a lot of money through fluctuating exchange rates if you are repaying your Spanish mortgage from a UK income.
Also seek advice on whose name you want to buy the property in - yours, your partner's or your company's - and the relative benefits. It is best if the property changes hands as little as possible to avoid hefty inheritance tax.
Home Insurance:Spanish banks often require that you take out home insurance cover with them with the mortgage, but legally you are not obliged to do it with them and you will sometimes find that insurers other than banks offer better rates.
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