The Top 5 Mistakes Foreigners Make When Buying Property in Spain

3 August, 2023 | Alba Tebar

Being new to a country is not easy, especially when it comes to settling down and buying a new property. Certainly, there are lots of laws, customs, and processes that can be difficult to understand, so this unfamiliarity can make the process of buying a property very difficult for you.

Focusing on Spain, if you are not familiar with the language or its property laws and rate interests, it is possible that you make some mistakes. In that situation, having a professional or and expert with you that can guide you and help you throughout the process of finding and buying a new house in Spain, can be really helpful.

At Hipotecasplus, we offer you our services as experts in the mortgage market in Spain. We have been working for many years with foreigners that come to Spain looking for a new property, so we are used to negotiating between banks and clients.

In addition, we have written this article in order to advise you about the most common mistakes foreigners do when buying a property in Spain, to help you avoid them.

1.    Ignoring the costs and taxes involved

A really common mistake foreigners do is to overlook the additional costs associated with the property market.

On the one hand, we are referring to taxes. The two primary taxes you will find in Spain are Value Added Tax (VAT) and Transfer Tax (ITP). VAT typically applies to new properties, while ITP applies to resale properties. The rates can vary between regions, so it’s crucial to consult with a professional to determine the applicable tax and its percentage.

On the other hand, you must be aware there are some fees that must be paid to notary and registration. In Spain, it’s mandatory to formalize property transactions through a notary, and there are associated fees for their services. These fees are typically based on the property’s value. Additionally, registering the property in the land registry incurs fees, which are usually a percentage of the property’s value.

Furthermore, do not forget about the mortgage-related costs. If you are financing the property purchase with a mortgage, it is possible that you also have to pay arrangement fees, valuation fees, life insurance, home, doctors.

2.    Registration on point

The first step of all when it comes to approving a mortgage, is to make sure that the client has all the registration requirements on point. So, without all the required documentation about yourself, your savings and income, and economic stability in general, bank entities will not give you the ok to firm a mortgage.

Specifically, one of the most important things to have if you are a foreigner in Spain, is your NIE number (required for property purchasing and legal conveyancing).

So, as soon as you get your NIE number registered, it will be easier for you to get your mortgage and your property.

3.    Superficial knowledge about the property’s characteristics

It is crucial to do deep research into the property you want to buy, in order to discover any unexpected costs or additional obstacles you wouldn’t have known either way. One of the main things you should pay attention to are:

  • Legal conditions and licenses
  • Possible renovation work needed
  • Possible restrictions or modifications
  • Urban planning regulations: obtaining the necessary permits and understanding the local zoning regulations is vital to avoid future complications.
  • Possible community fees: In Spain, many properties are part of communities or complexes that have communal areas and shared expenses. These communities often have rules and regulations that homeowners must adhere to.

4.    Not understanding the mortgage contract

It’s crucial to have a clear understanding of the terms and conditions outlined in the contract to protect your interests. Certainly, the language barrier can confuse you when it comes to sing a contract. So, before signing some paper you don’t really understand or that you are not 100% sure, ask a professional real estate agent to help you. Only by this way, you’ll make sure you are protecting your personal interests.



5. Avoiding negotiating your mortgage

One of the most important things to do when buying a property (no matter if it’s in Spain or in another country) is to negotiate the conditions with your bank entity, in order to obtain a mortgage that really fits your personal needs and interests. Because banks will try to obtain the maximum possible benefit from each operation and each client, so you’ll have to be smart enough to only agree when the offered conditions are really good enough for you.

In that sense, it is very helpful to count on the help of an expert, for example, a mortgage broker from Spain as Hipotecasplus. We have the tools to negotiate with banks and get for you the best mortgage and best possible loan, according to your characteristics and needs.

We have been working with foreigners that come to Spain to buy a property for many years, so we have a lot of experience when it comes to negotiating between banks and customers. We try to find a balance where both parts are happy enough, always taking special care of our customers’ interests.

So, if you want to obtain a good mortgage in Spain, do not settle for the first option offered to you. On the contrary, negotiate with your bank entity and try to focus it on your own perspective. Remember that you can always contact with our team of experts, and we’ll be the ones negotiating with the banks until we get for you the best possible mortgage according to your personal needs and interests. ¡We’ll be here to help you!