Sometimes foreign citizens who buy or want to buy a property in Spain, are not familiar with Spanish law, and don’t know that many of the things that are normal in their home country, work in a completely different way in Spain. In today’s article we would like to talk about mortgage loans in Spain, and some basics that buyers should consider:
.-If you need to obtain a mortgage to buy a property in Spain, it is highly recommended when you sign a private purchase contract, reservation, etc. you place as a condition the approval of the loan by your bank, noting that if finally the bank does not approve it, the money paid will be paid back to you, agreeing that the parties resolve and terminate the contract by mutual consent. If not, and the bank does not grant the loan, you could be taken before the Spanish Tribunals for a claim of breach of contract, and asked for compensation, face the loss of the money paid, etc.
.- It is very important to study not only in the interest rate of the loan, but also other terms, conditions and economic commissions, such as the arrangement fee, valuation fees, fees for payment in advance: partial or total cancellation fees, etc. . as they can be a significant amount.
.-Contrary to what happens in other countries, you should know that the valuation / survey made by the bank to determine the value of the property (and therefore the amount of the loan) normally will not be relevant to your agreement and therefore will not affect the price agreed with the seller.
.-In addition, in recent times, banks “invite” their customers to contract different kinds of insurance policies, which can have really important influence on the real cost of the mortgage loan, as important as the agreed interest rate. Although legally, if you get a mortgage loan you will be required to contract an insurance on the property, naming the lending bank as a beneficiary, you are not required to hire such insurance with the bank’s insurer, you can do it with any other insurance company that you want. Similarly, banks offer better conditions, subject to the client to contract other types of insurance with them, as such as life insurance, home, etc. Therefore, if obtaining the loan is conditioned on the hiring of their insurances policies, it is essential to compare its cost with others in the market, since the real cost of the loan can be increased very significantly.
If you want to sell or buy a property in Spain having a professional and expert advice, contact us.
The information provided in this article is not intended to be legal advice, but merely conveys general information related to legal issues.
Carlos Baos (Lawyer)
Spanish Law firm solicitor attorney barrister.
White & Baos 2015 – All rights reserved