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Twenty Common Mistakes When Buying Property in Spain

Twenty Common Mistakes to Avoid when Buying Spanish Property

People buy property in Spain for many different reasons. The most common ones are:

Whatever your reason for buying property, you need to keep some important things in mind to avoid making a costly mistake. Here is a list of twenty mistakes to beware of.

  1. Failure to accurately work out total cost and ability to pay. Many buyers do not thoroughly investigate the whole process of buying, and fail to calculate total costs.
  2. Not fully understanding how the mortgage will work and costs and charges associated with it.
  3. Not taking into account 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 council tax) etc.
  4. Using the entire budget to purchase the home, leaving nothing to furnish the property or install fittings, and leaving nothing over for contingencies such as a health problem or unexpected repair costs.
  5. Failing to check that the property is completely legal, or ignoring any irregularities such as missing licences.
  6. Not taking into account the effect that an increase in interest rates would have on mortgage repayments. Many people do not check what their mortgage repayments would be at higher interest rates.
  7. Taking out a mortgage for more than 25 years which is a good deal for the bank and a bad one for the owner.
  8. Ignoring the prudent financial advice of institutions such as the Bank of Spain to keep debt at a maximum of 30% of nett family income.
  9. Risking personal and financial problems by asking parents, relatives or friends for a guarantee on a loan that runs the risk of default.
  10. Not doing basic research to see if a property is expensive or cheap compared with similar properties in the same location.
  11. Believing that property prices always go up and planning around that belief.
  12. Failing to shop around for the best mortgage rates.
  13. Being afraid to negotiate the asking price. There is nearly always room for manouevre, so do not pay more than you really have to.
  14. Making a hasty decision to buy because of some external factor (such as a forthcoming rise in taxes, ending of grant aid etc).
  15. Not having a long-term vision. For example, buying a home without considering that in a few years more space may be needed if you have children. or buying a home that has or is accessed by many steps. As people age, steps can become a very real problem.
  16. Choosing the wrong location. Once you've bought, you can't easily move, so you need to be completely happy with the location. That means checking it out thoroughly before you buy.
  17. Buying an apartment off-plan with the intention of selling it immediately when it's completed. It's likely that many others will have exactly the same idea. The result is several identical or similar properties come on the market at exactly the same time, often making it difficult to sell.
  18. Failing to check out employment opportunities in Spain. If you don't speak and write Spanish fluently, your job opportunities will be severely restricted. Keep in mind that professional qualifications obtained in other countries may not be recognised in Spain.
  19. Not being aware of things you will need to do to stay legal in Spain. This includes things like changing your driving licence and registering an imported car in Spain, or checking the rules about letting out your property.
  20. Falling victim to volatile exchange rates. Rates can fluctuate by a lot overnight. For example, sterling took a significant plunge against the Euro when the Brexit referendum results were announced. In the aftermath, many people who were committed to purchasing using sterling to fund the purchase found they needed more than 10% over what they had planned for. Those who could not raise the extra cash lost their deposits.

It should be clear that there are potential pitfalls to buying property if you do not do your homework, but these are not exclusive to Spanish property. The same pitfalls exist no matter where you buy property. The key lesson to learn is to make sure you plan ahead and research your target area before committing to a purchase.

Buying property in Spain - First Steps - Choose your area

Decide on the type of property you want and see what is available

Calculate your budget and arrange finance

Arrange an inspection visit to see available Spanish properties

Making an offer on a property

Exchanging currency

Arranging a mortgage on your Spanish property

Legal matters

Deposit and completion

Tax considerations when buying Spanish property

Approximate costs when buying property in Spain


Mistakes to avoid when buying