Loan to buy a house “Westlaw.com” All rights reserved
Taking a loan from a bank to buy a house is very common in real life. Banks are not in the business of charity, they lend money to people to earn interest. That’s why they weigh the borrower’s ability to repay the loan before deciding whether to approve it or not.
Banks are not government departments, so it is up to each bank to decide what documents they need from borrowers. However, basically all banks are the same, as long as the borrower proves that he or she has a certain amount of legal income. As long as there is income, there will be money to pay back and the loan will be easily approved.
Common documents needed for a loan to buy a house
According to the above, the documents needed for a loan to buy a house are nothing more than proving to the bank that you have a legal income and that you can afford to pay back the money.
Note: It is not enough to prove that you have the money, you also need to prove that the money comes from a legitimate income.
If the borrower is an employee, then you only need to submit documentation of your income. In this case, it is sufficient to submit a work contract and the last months’ salary. It is better to have a permanent contract, so that you can prove your ability to repay the loan.
In addition, the bank’s approval of the loan depends on the borrower’s income, so you should make sure that your paycheck is high enough. This is because the bank will look at the borrower’s income after deducting the family’s living expenses to see if there is any money left over to pay the debt.
Note: The more stringent banks will also ask the user to submit an insurance history (vida laboral). This is to check if the borrower has been unemployed for a long time in his or her working life.
If the borrower is the owner of a business, he or she will need to submit quarterly tax returns (MODELO 130 or 131, or 303 and 202).
For more information about the quarterly tax of the owner, please search for related article in our website.
In addition, in basically all cases, the bank will ask the borrower to submit RENTA (personal income tax), because RENTA represents a person’s income.
Related article: Personal Income tax rates in Spain
The issue of anti-money laundering examination for buying a property
When buying a property in Spain, if the seller is a bank or a developer, they are obliged to conduct an anti-money laundering review. This anti-money laundering check is to see if the money you used for the down payment is legitimate income and if you have declared it for tax purposes. If the person cannot prove that the money they used to buy the property was legitimate income, then they may not execute the transaction. Because if someone uses the property for money laundering, the bank or developer will be held responsible, so they will check the buyer’s income to be sure.
Credit Blacklisting Issues
Banks are in business and it is their internal business decision to decide whether or not to approve a loan when reviewing it. If you are on the credit blacklist because you owe money, most banks tend to refuse to approve the loan because they are afraid that the other party will not pay the money back.
