Deciding a budget for your new property can be a bit hit, and miss. Start with any savings that you have reserved for your property purchase. It is worth mentioning here that if you are intending to apply for a mortgage to purchase your new property, and this is an investment or holiday home, the banks are likely to only offer you 50% of the value of the property. (This is the value according to the banks valuation, and not the purchase price).
If you are relocating to Gran Canaria or Spain permanently, then you will have to be resident, and have an NIE number. This will allow you a higher percentage of the value of the property in mortgage terms, but this will still probably only be in the region of 60 - 70%. Again this will be based on the valuation of the property carried out by the bank and not on the purchase price of the property.
In deciding what can be afforded monthly, some people factor in potential rental earnings that can be gained from the property. Our advice would be not to factor this in, because it cannot be guaranteed, and could result in a great deal of stress for you in the future.
If you are relying on the sale of any other property to make up any shortfall in the purchase of your new property in Gran Canaria, then sell it first. Once you sign a "Contrato De Compraventa (this is a legally binding agreement to buy a property) you are committed. This contract will also usually include a deadline date for the completion of the purchase. If, for any reason you did have to defualt, you may lose the 10% deposit that you will have to pay when you sign. So make sure you have all the funds needed to complete the purchase of the property, before you even begin.
Another point that we have to make absolutely clear, is on top of the agreed purchase price of the property, you need to allow for the costs of your legal fees, and taxes. These can amount to 15% on top of the purchase price of the property.
That is enough doom and gloom. Consider all your options. Just because you had your heart set on one particular style of property in a specific region, that doesn´t mean that you wont find another property suitable, and attractive to you, if you keep your options open, and are prepared to look around. You stand a better chance of finding the right property for you, if, you are prepared to be flexible. This is where a good local real estate agent may be of help to you.
Once you have decided, and settled on a property, your first concern should be making absolutely certain that you have the necessary funds to be able to pay the 10% deposit.
The Seller Is Asking For Black Money. What Is It?
Some sellers of pre-existing properties (this is not when you are buying from a property developer) may try to convince you that a sum of money should be paid under the table. This is done in cash, and is not declared. This results in an under declaration on the Escritura (title deeds). This may affect the amount of mortgage you are able to obtain, if you are buying property with a mortgage. This road will only lead to anguish for you in the future, as it will leave you, the new owner, with an artificially high Capital gains tax payment, when you choose to sell. It is also illegal.
If you are applying for a mortgage to complete the property purchase, bear in mind it is a reasonably complicated process. It would be of use to you to contract the services of a bilingual broker, to ensure that your best interests are met.
You will find a list of the documents you are most likely to need when applying for a mortgage, available on the mortgage application pages. The information available on the mortgage application pages will also help you determine which type of mortgage is right for you. You may need to use the services of a good Asesor (legal Adviser) or lawyer to obtain some of the documentation that is mentioned.
We wish you all the luck in the world with your property search, and if you follow the steps, and simple advice in this section, we are sure everything will go smoothly for you, and we look forward to welcoming you to the growing community of British expats living in Gran Canaria.