Twenty common mistakes when buying Spanish property

• Failure to accurately work out total cost and ability to pay. Many buyers are not financially literate and do not seek professional advice on the whole process of buying.
• Forgetting to take into account that the total price of the house must include approximately 10% to cover taxes, legal fees and paperwork.
• Not fully understanding how the mortgage will work and costs and charges associated with it.
• Not realising that payments do not stop at the time of purchase, but will be followed by charges for electricity, water, communications, security, maintenance, community fees, insurance, IBI (Spanish property tax) etc.
• Using the entire budget to purchase the home, leaving nothing to furnish the property, instal fittings and leaving nothing over for contingencies such as a health problem or simply repairing a car.
• Failing to check that the property is correctly valued and is completely legal.
• Not taking into account that interest rates are unusually low and that the logical thing is for them to increase. Many people do not check what their mortgage repayments would be at higher interest rates.
• Taking out a mortgage for more than 25 years which are is a good deal for the bank and a bad one for the owner.
• Ignoring the prudent financila advise of institutions such as the Bank of Spain to keep debt at a maximum of 30% of family income. (We presume they mean nett income).
• Risking personal and financial problems by asking parents, relatives or friends for a guarantee on a loan that runs the risk of default.
• Not doing basic research to see if a property is expensive or cheap compared with similar properties.
• Believing that house prices always go up and planning around that belief.
• Failing to shop around for the best mortgage rates.
• Being afraid to negotiate the asking price for fear that the seller will be angry and refuse to sell.
• Buying a home with the heart and not the head.
• Buying a VPO - these are homes originally funded by local authorities and have their prices capped for long periods (often 30 years). In the past, people have bought such homes, recording the capped price on the purchase contract and paying substantial cash sums 'under the table'. The authprities have clamped down severely on 'black money' transactions and they are now virtually non-existant. This means people who bought VPO houses with a 'black money' element in the transaction will find it virtually impossible to resell at even close to their original purchase price.
• Making a hasty decision to buy because of some external factor (such as a forthcoming rise in taxes, ending of grant aid etc).
• Thinking that property prices have touched botom and therefore it is the best time to buy, because not everyone thinks the same in all areas.
• Failing to consider the option of renting instead of buying.
• Not having a long-term vision and buying a house without considering that in a few years more space may be needed if, for example, you have children.