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PROPERTY

Property in Spain: Seven key ways to save money when buying a home

Buying a home in Spain can represent a significant investment, perhaps one of the largest you’ll ever make. The Local speaks to a Spanish property expert to reveal seven cost-cutting tips that can help you save thousands when you find the right property.

property sella spain's costa blanca
A couple look out over the village of Sella on Spain's Costa Blanca from their rooftop balcony. Photo: Euan Cameron/Unsplash

We aren’t just talking about the price of the actual property. Buying Spanish real estate also involves paying taxes and fees, between 8 and 15 percent depending on the price of the property.

Given the size of the investment, it makes sound financial sense to look at how to cut down your expenses.

In this article Celeste Alonso, manager of The Property Agent and an expert on real estate on the Costa del Sol, suggests important seven ways to save money when buying a home in Spain. 

Between them, they can potentially save you thousands of euros.

1. Tap into expert advice

Your first step to save money when buying a home in Spain is to take advice from experts in the area. They include:

An estate agent with established roots and experience in your chosen location. Local expertise is vital, especially when it comes to understanding market prices – only a seasoned real estate agent will be able to tell you if a property is really worth its asking price. A good agent will also be useful when it comes to negotiating the price (see below).

A lawyer who speaks your language and defends your interests. Expert legal advice will check your chosen property for charges and planning illegalities, problems that can cost you money, time and stress later on.

Bottom line? Choose an agent who listens and cares about your purchase. This attention to detail will not only ensure you get the home you’re looking for but could save you money during the process.

READ ALSO: The best tips for buying a property in Spain without an estate agent (and avoiding scams)

2. Negotiate the price

In Spain, haggling forms part of the culture, so there’s always wiggle room on a property price. However, there’s also a fine line between paying less and offending the owner. Go too low, and you risk the seller walking away from the table.

So, before you suggest a sum, tap into some expert advice from your estate agent to help answer the following questions:

Is the property priced to the current market?

A reputable local estate agent should be your first stop for advice on the price. They will be able to guide you on market values and tell you if your chosen property has a fair price. Ask also for examples of recent sales of similar properties. A seller may be more likely to accept a lower price if you can show that comparative homes have gone for less.

save money spanish property, Gothic Quarter, Barcelona, Spain

Would you like to own a flat in Barcelona’s Gothic Quarter? Photo: Biel Morro/Unsplash

How motivated is the seller?

Your agent may also be able to give you some background on the seller. Why are they selling? How keen or desperate are they for a quick sale? Circumstances working against the owner, e.g. divorce, debt or mortgage problems, can shift the balance to the buyer’s favour.

How much would a cash purchase lower the price?

Cash is always king and can help you save money when buying a home in Spain. If you are a cash buyer (or can be one), see if you can negotiate a lower price in exchange for a quick sale. A seller in a hurry may be willing to knock off a few thousand euros if it means you buy sooner.

Bottom line? Before you go to the negotiating table, decide how high you are prepared to go for the property. If the seller will only accept more than you can afford, be ready to walk away.

3. Bag some extras

Another way to save money when buying a home on Spain is to purchase a property with as many extras as possible. They include:

  • Furniture and appliances – even if the furniture isn’t quite your style, you’ll be able to move in straight away and save on initial purchases.
  • Soft furnishings – curtains and blinds can be expensive, particularly if they’re custom made. You could save money if you negotiate their inclusion in the price or make a separate offer for them.
  • Garden furniture and fittings – most properties on the Costa del Sol for example come with an outdoor space, and you’ll save money if the terrace tables and chairs, pool loungers, barbecue… come included

Bottom line? Extras are only worthwhile if they’re quality. Sub-standard items with high wear and tear will cost you money to get rid of.

4. Get a survey

This tip for saving money when buying property Spain might seem contradictory because, after all, a survey costs money. However, the initial outlay can save you a lot of money later on.

Bear in mind that home staging and a fresh coat of paint make a home look fantastic, but they could be hiding a wealth of problems underneath. This is particularly true if you’re interested in an older or rural property. Bring in a surveyor to alert you to possible issues and defects so that you can negotiate a reduction in price with the seller or ask them to fix the fault before they sell.

Bottom line? Only a surveyor will be able to tell you the true nature of those cracks, the state of the roof, the age of the plumbing and electrical installations…

5. Shop around for a mortgage

If you’re buying in Spain with a mortgage, spending some time researching what’s available has the potential to save you thousands. To help you see what’s available, use an online comparison tool and take note of the best mortgage deals suggested. Then contact the banks in question and find out what they can offer you.

Bear in mind:

  • The pros and cons of variable and fixed-rate mortgages.
  • Bank commissions for early cancellation, switching to a variable from fixed etc. Read the small print carefully and make sure you understand every clause.
  • Other commitments such as compulsory house and/or life insurance.

All the above can cost you money, so it’s worth spending some time doing the Maths.

Bottom line? With the Euribor in the negative level now is an excellent time to take a mortgage in Spain. 

READ MORE:

 

6. Use a currency transfer specialist

If you’re buying in Spain with funds from a non-euro currency, transferring the money to Spain from pounds sterling or Swedish krona, for example, can cost you thousands in bank fees. To avoid extortionate bank charges, use a specialist currency firm to transfer funds for your purchase. Not only will you get a better exchange rate than at a bank, but you will also avoid a high commission. Transferwise is a great online tool that converts currencies at the market rate without all the extra costs charged by banks.

Bottom line? Consider looking into an exchange rate. While no one has a crystal ball and can predict what currency rates will do, there are general trends. Committing to a fixed rate for the time it takes you to buy can save you a lot of money.

new build spain

Buying a new build in Spain is a good way to get around the shortcomings of many Spanish homes, which don’t usually include outdoor living spaces. Photo: Ralph (Ravi) Kayden/Unsplash

7- Buying new build or off-plan

Purchasing a new property in Spain is a popular option, and there are currently some excellent new developments under construction. Prices for new builds did however increase by 3 percent in 2021, so finding ways to cut costs is more important than ever. 

Here’s how:

  • Buy off-season

The winter months are the least busy time of the year for off-plan property buying in Spain (these are homes that haven’t been built yet). By extension, this is when you’re most likely to find better discounts. January is generally a quiet time of the year and a good month to approach the sales office.

  • Negotiate the price

Just like regular homeowners, developers are often open to discussing a price. Even if they refuse to budge on the final price, you may be able to get a special deal on the mortgage or an extra included for the same original price.

  • Change your requirements

If you have your heart set on a particular new development in Spain, but your dream home is out of your budget, consider buying a smaller property or one with a different orientation. Slightly smaller floorplans, apartments looking west instead of south or with views over the hills instead of the sea are almost always cheaper.

  • Upgrade the finishes

Even if you can’t negotiate a lower price for your new build, the developer may be open to giving you better fittings and fixtures. You could get quartz worktops instead of granite, Bosch appliances rather than Balay or the air conditioning fully functional instead of the pre-installation. All these upgrades are worth money and add value to your home in Spain.

Bottom line? The property market in Spain is slanted towards the buyer even though prices did increase slightly in 2021 and is expected to carry on doing so in 2022, so there’s still plenty of room for negotiation. And of course, if you don’t ask, you don’t get!

This article has been written by Celeste Alonso, who runs The Property Agent, a real estate agency specialising in the Costa del Sol property. If you are looking for property on the Costa del Sol contact her for HERE. 

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PROPERTY

What the Euribor rise means for property buyers and owners in Spain

The rise in the Euribor interest rate, used to calculate mortgage payments in Spain, is causing big changes in the mortgage rates.

What the Euribor rise means for property buyers and owners in Spain

Looking to buy property in Spain? Already a homeowner here? Well, you may have heard something about rising interest rates recently.

Or perhaps changes to the terms of your mortgage. Or the Euribor – but what is it, and what’s going on?

What is Euribor?

In Spain, Euribor is the interest rate most often used to work out mortgage payments and to calculate both variable and fixed rates.

It is anchored to the interest rate set by the European Central Bank, and, as we are now seeing, quite responsive to global economic events.

It’s the interest rate that banks in the Euro Zone use to lend to each other, so when the base rate goes up, the Euribor does too, which sends mortgage interest rates across the Eurozone rising. 

Rising rates

Most Spanish mortgages with variable rates normally vary based on a variety of factors, but this number has been rising and in May 2022 saw figures of 0.240 percent (Tuesday May 17th), well above the average. 

The rises throughout May are leading many in Spain, and indeed across Europe, to wonder how high their mortgage rates can go, and when the rises will stop.

Banco de España has estimated that the increases could range from anything between €35 a month to an additional €400. Bankinter predicts the Euribor rate will finish the year at a staggering 0.40 percent, but, more encouragingly, Caixabank’s prediction puts it at just 0.13 percent by the end of 2022.

On Euribor.com.es, a website that tracks the index on a daily basis, they suggest that the market consensus predicts the Euribor will finish at around 0.3 percent at the end of the year, but could reach as high 0.8 percent in 2023.

All of them agree, and most other economic indicators suggest, that whatever the figure at the end of the year, it will remain positive, so it seems almost certain that mortgages will continue to rise throughout 2022 at the very least.

This instability, in addition to global inflation and supply chain problems, could mean that mortgage rates will be affected at least until 2023, with some predictors even signposting 2024 as the possible end of a rise in mortgage prices.

With things uncertain in the mortgage industry, and the world economy more broadly, perhaps you’re thinking of ways to try and insulate yourself from the climbing interest rates.

How to protect yourself from the rising rates

One way to weather the storm of interest rate increases is to change your mortgage from a variable to a fixed rate, either by negotiating with the your bank or by changing bank altogether – a process known as subrogation.

According to data from MyInvestor, during March and April the number of subrogations has started to rise.

Subrogation basically means switching the mortgage from one bank to another to change its interest rate. Although it does involve certain charges in order to do so – you pay the valuation of your house, which normally costs a few hundred euros, and a fee charged to the bank you are leaving, which can cost up to 2 percent of the outstanding amount – it could, and probably would, work out cheaper than paying the hiked interests rates over time.

You could also try and take out a new mortgage with another bank and use the borrowed money to settle the loan. This is, of course, a more expensive option as you have to pay the appraisal, the commission for early repayment of the current credit (again, up to 2 percent of the outstanding amount) and the expenses associated with its cancellation of registration, which normally runs to around €1,000.

READ ALSO: Spanish mortgages – Ten things foreigners should know before getting one

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