Buying a home is one of the most significant financial decisions in a person’s life, especially when it involves signing a mortgage. Before making this decision, it is crucial to consider several aspects: the necessary documentation, ensuring the house is free of encumbrances, having sufficient savings, and knowing the monthly payments and duration of the loan.
Documents required by the bank
You will need your ID, the latest tax return, the last three pay stubs, your employment history, and bank account statements. Self-employed individuals must present the latest quarterly VAT and income tax returns.
Key questions to ask the real estate agent
If the property is second-hand, it is essential to know if it has a habitability certificate and an energy certificate, if there are any outstanding economic charges (such as community fees), and if the basic utilities are registered.
Steps after deciding to buy the house
First, request a simple note from the Property Registry to verify all information related to the property, including any debts. Then, sign a deposit contract to reserve the house. This private contract involves a down payment that will be deducted from the final purchase price. Although it is not mandatory to sign it before a notary, it is recommended.
The next step is to seek financing, usually a mortgage. Analyze the market to find the best offer, using online mortgage comparators. Finally, sign the purchase contract before a notary, where the rights and obligations of both parties are detailed.
Verification of the property’s debts
Request the simple note from the Property Registry to know the house’s status regarding mortgages, embargoes, and tax charges. Additionally, ensure that the property is up to date with community payments and municipal taxes by requesting the respective certificates and receipts.
Energy certificate
Since June 1, 2013, it is mandatory in Spain that all homes for sale or rent have an energy certificate, regulated by Royal Decree 235/2013. The responsibility for obtaining this certificate lies with the property owner.
Necessary savings
It is recommended to have saved between 30-35% of the property’s value. Generally, banks finance up to 80%, so the remaining 20% must be provided by the buyer, along with an additional 10-15% to cover taxes and other purchase-related expenses.
Monthly installment
The monthly installment depends on the price of the property, the mortgage amount, and the loan term. It is recommended that the installment does not exceed 40% of the monthly income of the holders.
Mortgage duration
The term of a mortgage can extend up to 30 years, depending on what you can amortize during that period. Generally, longer terms have lower monthly installments but higher interest rates.
Age to apply for a mortgage
There is no specific legal limitation, but it is generally established that payment must be completed before the age of 75. Therefore, the maximum age to apply for a mortgage is usually 65 years.
Variable or fixed mortgage
Fixed-rate mortgages offer a constant installment throughout the loan’s life, while variable-rate mortgages depend on indicators such as the Euribor. The choice between one or the other depends on the personal financial situation and payment forecasts.
Costs associated with the mortgage and purchase
The costs include notary, registry inscription, agency, VAT or transfer tax (depending on whether the property is new or used), and mortgage expenses such as interest, insurance, and appraisal.
Time frame to sign the mortgage
After the mortgage is approved, you must choose a notary to schedule the signing. The law grants a reflection period of 10 calendar days (14 in Catalonia) to review the conditions before signing before a notary.
Early mortgage repayment
It is possible to amortize the mortgage partially or fully before the agreed term. However, most banks apply commissions for early repayment, varying according to the type of mortgage and the amortization period.
**Changing the mortgage to another bank**
A subrogation can be carried out to change the mortgage to another bank, which can be more profitable in the first years of the loan. Before making the change, analyze the subrogation costs and conditions.
Death of the mortgage holder
In case of death, the debt is transferred to the heirs, who must present the corresponding documentation and can use life insurance to cover the debt if the holder had one.
These considerations are essential for making an informed decision when acquiring a home and taking out a mortgage.
Ready to buy your home with the best advice and conditions? Leave your details in [this link] and our team of experts will help you every step of the way at the best price. Don’t wait any longer, contact us today!