Buying a home is one of the most important decisions in a person's life. It involves a significant investment and therefore it is essential to follow a well-defined process. Below, we present a complete guide covering the steps to buy a home and apply for a mortgage .
Before you start looking for a home, it's essential to be clear about how much you can afford to spend, making sure that your mortgage payments don't exceed 30% to 40% of your monthly income. This margin will help you maintain financial stability and continue saving for other goals. It's also time to think about what type of mortgage might best suit your needs: fixed, variable or mixed. Consulting an expert can be helpful in making this decision.
It is also important to save for the initial expenses that go beyond the price of the property. These include VAT (10% for new homes) or the Property Transfer Tax, which varies between 8% and 10% depending on the community, in the case of second-hand homes. Added to this are appraisal, notary and agency fees, among others, which usually represent between 8% and 12% of the value of the property.
With these elements clear, the search for a home becomes easier. Defining the area and the characteristics you want will help you focus your search, whether through online real estate portals or through agencies. If you decide to opt for a second-hand home, it is essential to check that it is free of encumbrances, requesting an information note from the Property Registry to verify the absence of debts or liens.
For more details on the entire process, you can check out our guide on how to buy a home , where you will find additional recommendations and steps to follow to ensure a successful purchase.
Apply for a mortgage
Once you have found the house, it is time to apply for the mortgage. To do so, you will need to gather personal documentation, i.e. DNI or NIE, updated employment record, latest income tax return, and receipts for other debts. On the other hand, you must provide financial documentation.
In this case, if you are self-employed, include the annual VAT summary, Social Security receipts, and fractional payments of personal income tax. For employees, you only need to provide your last three pay slips and employment contract.
The binding offer
If your application is accepted, you will receive a binding offer. This document details the conditions of the loan and is valid for 14 days. It includes information on:
• Loan amount and method of delivery.
• Amortization: number of installments, frequency and amount.
• Interest rate and commissions.
• Other associated expenses.
First visit to the notary
Before signing the mortgage, it is mandatory to visit the notary. This consultation is free and will allow you to check that the loan does not include abusive clauses and that you understand the conditions of the loan.
Signing of the mortgage and registration
Finally, once everything is in order, you will proceed to sign the mortgage and purchase the house. This operation is carried out before the notary, and after signing, you must register the operation in the Property Registry.
Calculate your payment capacity
Banks typically finance around 80% of the appraised value of the home. You should be prepared to cover the remaining 20%, plus the costs of purchasing and arranging the loan. Make sure your mortgage payments stay within a manageable range.
Final considerations
Before signing any documents, make sure you understand all the terms and conditions of the loan. This includes calculating the maximum interest you could pay if interest rates rise. Also, be aware of any fees that the financial institution might charge.
Buying a home and taking out a mortgage are processes that require attention to detail and careful planning. By following these steps, you can realize your dream of homeownership in an informed and responsible manner. Good luck on your journey to purchasing your new home!