ALL YOU MUST KNOW ABOUT SPANISH

Amortizacion ( Repayment)

Repayment of the initial loan amount by means of a scheme of instalments, including a repayment of capital borrowed and an amount for the interest charged. According to the type of mortgage, these instalments can be fixed for the whole life of the loan or vary with interest rate fluctuation.

Cancelacion anticipada (Early Repayment or Early Redemption)

This means the total or partial repayment of the borrowed amount before maturity. In par tial repayments, you can choose to reduce the monthly payment and keep the agreed final maturity date, or keep the same amount of instalment but shorten the term.

Cancelacion registral (Register Discharge)

Once the mortgage has been repaid, the encumbrance has to be released from the Land Register. This involves costs of Notary, Register and Solicitor.

Carga (Encumbrance or Registered Charge)

Legal charges regarding a determined property entered in the Land Register, i.e. mortgages, usufructs etc.

Cedula de habitabilidad (Occupancy Certificate)

This document certifies that the home meets minimum occupancy conditions. You will need to produce this document when contracting utilities such as water, electricity and gas.

Comision de apertura (Opening Fee or Loan Arrangement Fee)

This is a percentage of the loan discounted from the total amount when it is paid into your account, for services rendered in granting and processing the mortgage.

Comision de cancelacion anticipada (Early Repayment Fee)

This fee, indicated in the mor tgage contract as a percentage of the repaid amount, compensates the lender for the loss of interest payments expected for the period between the early redemption and the agreed maturity.

Diferencial (Margin)

This is a set value throughout the term of the mortgage which is usually expressed in percentages or fractions and which is added to the value of the reference rate to calculate the interest rate for each revision for variable rate capital repayment mortgages.

Escritura publica de compraventa (Deed of Sale)

This document legalises the purchase and shall be signed by both contracting parties and by the notary. The purchaser obtains a first copy of the deed once all taxes have been paid and the corresponding inscription in the Property Register has been done.

EURIBOR

European Inter-Bank Offered Rate, an index based on the interest rate for deposits in Euros at 12 months that is published by the European Central Bank and commonly used as reference rate for variable rate mortgages.

Gestoria

The professional adviser who looks after dealings with the Register and the payment of taxes to the Tax Authority.

Hipoteca ( Mortgage)

A legal charge entered in the Property Register when a real estate property is assigned to be collateral for a mortgage loan.

Impuesto actos juridicos documentados, AJD (Transfer Tax)

This tax is payable on sales transactions subject to VAT and mortgage loans, at a rate of 0.5%-1,5% on total coverage of the mortgage or on the deed amount in the case of sales subject to VAT.

Impuesto sobre el valor anadido, IVA (Value Added Tax, VAT)

Sales made directly by a developer (newly built homes) are subject to VAT. The current standard rate is 7% on the sales value in case of private use and 16% in case of commercial use. In some autonomous regions like in the case of the Canary Islands the rate might var y.

Impuesto sobre transmisiones patrimoniales, ITP (Capital Transfer Tax)

This tax is payable instead of the VAT when the property is not newly built. In this case, the standard rate of 7% is independent of the assigned use of the property, but there are regional differences.

Indice de referencia (Reference Rate)

This base rate is, on variable rate mortgages, used to calculate the new interest rate when it is reset. Our advice: Pay attention to the fact that the reference rate, together with the margin, determines the amount of the future instalments.

Interes ordinario (Ordinary Interest)

That is the nominal interest rate. It has to be specified in the contract whether the rate is fixed or variable throughout all or part of the loan. IRPH ?ndice de Referencia de Prestamos Hipotecarios = Similar to the EURIBOR, this rate is used as reference for variable rate mortgages and published by the Banco de Espana. It represents an average rate for mortgages offered by all Spanish financial entities.

Notario ( Notary)

The Notary acts as the public official when signing the public deeds, such as the sales or mortgage loan agreement. He is obliged to ensure that current legislation is fulfilled and to defend the interests of the parties, particularly the borrower