Spain has been the darling of the overseas property buyer for many years in particular the favourite of the British property buyer. It is an established overseas property market however this does not mean that it has not had its problems.



With an ever-increasing number of international investors, the mortgage market in Spain is highly active, with more than two hundred local banks offering home loan products in the country. Your mortgage loan options will greatly vary, depending on the type of property and the purpose of buying it. Usually, the lenders offer loans up to 70 percent of the property value, which is the maximum permissible loan as per Spanish laws. While most lenders may not lend beyond three times your income, a few international institutions such as Barcalys Bank may consider offering four times individual income. Lenders prefer customers with steady employment.

Before setting out to invest in a property in Spain, it is imperative for buyers to understand the intricacies involved in the buying process. To purchase a property in Spain, you need a ?NIE' number or a taxation identification number. It is crucial to obtain this number, since it is required for all the formal proceedings of property purchase. You can obtain this number with the help of a Spanish solicitor, by giving him a power of attorney. Make sure that the solicitor has your best interests in mind when working for you. After selecting a suitable property, you need to sign a ?reservation agreement'. At the time of signing this agreement, you are required to pay an amount around one or two percent of the property value. The vendor in turn, officially withdraws that particular property from the market, to enable your solicitor to proceed with other formalities, beginning with ?land registry checks'. After confirming that the property has a clear title and there are no outstanding debts on the property, the contract of sale is signed by the concerned parties. Upon signing, you are generally required to pay about 10% of the agreed amount as deposit. For under construction properties, you should make sure that your builder gives you a copy of the insurance cover or the bank bond, to safeguard your investment in case the builder fails to complete the project.

After completing other formalities, the concerned parties, their lawyers and bank representatives, in case of a mortgage loan, go to the public notary's office to sign the final contract, after which the title deed is transferred in your name.

Depending on the type of property you wish to buy, the additional costs on your purchase will vary. For new properties, a 7% VAT along with a stamp duty of 1% is applicable, while old resale property buyers pay only the 7% VAT. If you are buying land in Spain, you will have to pay 16% VAT and 1% stamp duty. Other additional costs may include land registry fees, lawyer's fees, notary charges and other extra charges, if you have obtained a mortgage.