Are you looking for a good place to invest your money? Or do you want a beautiful vacation home where you can bring your family during the summer? Or are you thinking of retirement and want to find a country with a low cost of living and yet provide a good quality of life?

Well then go to Spain. Barclays Bank enlisted the University of Navarra Business School to do a study among Britons. They discovered that 65% of Brits said Spain was their first choice in overseas property destination and a 38% said it was their only possible choice. And this study is being confirmed all over, not least of all in Spain’s property registry. Spanish town halls had registered 29% more British residents than in the previous year.

A Pro-Buyer Environment

One reason why Spain is such a good real estate prospect is that the policies of Spain have become significantly pro-buyer. The government is clamping down on illegal sales of properties, and the recent winners of the elections have made it a part of their political platform to increase incentives for foreign investors. There is also a greater sense of professionalism in the real estate industry as the developers are competing for buyers by providing better services and employing people who can handle the needs of non-Spaniard buyers. The government has also enacted laws that allow non residents to stay in Spain without visas or work permits.

Scams to Avoid

Some have found themselves embroiled in certain disastrous off plan purchases. These purchasers have usually optioned properties that turn out to be subject to planning irregularities. To avoid this always go to a lawyer and check the documents in the municipal hall. Don’t buy a property without doing research and getting facts. The legal system is there it’s just that some people try to make shortcuts.

A marketing device that used to be a core feature of Spanish property marketing is the rental guarantee. But this “guarantee” was often achieved by simply inflating the price of a property by the level of the required guarantee. This would then be paid back to the purchaser over the agreed period. A 6% guaranteed yield is promised for two years, so the price is hike by 12% and placed in a “guaranteeing” bank! Hogwash! Be careful of this scam.

But despite the occasional scammer (and all countries have them) Spain continues to be a fantastic real estate prospect, especially with new laws and government policies to protect the buyer.

There are several different types of mortgages that you can avail of in order to find financing for your property in Spain. It’s really a lot easier than people think and all you have to do is to make calls, visit websites, and look through the brochures to find the best deal given your financial situation. Here are some types of mortgages.

- Capital and interest mortgage : Repayment of the loan occurs during the term and you pay interest over the current loan amount. Usually the monthly payments arehigher than with an interest only mortgage. The loan to value is maximised on 80%.

- The Interest only mortgage : with this kind of mortgage the actual borrowed amount or principal will stay the same throughout the term. During the term you will only pay interest. The highest interest only mortgage is 70% loan to value.

- Combined mortgage : It’s possible to get the best of both worlds by combining the two mortgage types. You only have to pay the interest during the first part of the term, either a third of the term or a fixed number of years.

Getting loan approval is not that difficult either. Here are some requirements of some banks,

- Age : most banks in Spain will grant a loan if you are seventy and below although there are those that will be given a loan even if they 80 or 85 years. In some cases it is possible to let somebody younger, i.e. a child, co-sign the mortgage in order to stretch the term.

- Net income : You can use approximately 40% of your net income on mortgage payments.

- Valuation of the property : The bank will need to have a taxation done by an independent agency. They will normally choose which organization will perform this task. Most banks will base the mortgage on the valuation and the actual selling price. They will choose whichever is lowe Some banks use solely the valuation. With these banks you can, if the valuation is considerably higher than the selling price, get one hundred percent financing. In most cases you should realise that you have to invest some 30% yourself.

- Resident or non-resident : Residents can, with restrictions, get better deals than non-residents.

- First or second home : Is of importance to some banks since for them it will mean you are less likely to flee the country, as you already have existing property. This minimizes their risk.

One of the challenges of buying a home abroad is chances are you will not be personally able to conduct some of the transactions required for the numerous documentations and paperwork. You have to fly back to your own country, either to your job or to your family. Even if you do have plans of relocating you may have to tie loose ends or oversee packing and other concerns. If this is true then you will need a Power of Attorney. This authorizes someone like a relative, friend or solicitor to handle your legal transactions. In Spanish it’s called Poder, which literally means “power:”.

A Power of Attorney is a document which is prepared and duly stamped at the notary. It is still possible to have a Power of Attorney drawn up abroad. The language used has to be Spanish. It also has to be “apostilled” according to the Hague Convention of 5 October 1961.

A Power of Attorney is crucial if you are not able to personally attend to the documents needed in buying a home, which is a main concern of foreigners or non-residents. A Power of Attorney must be drawn up if you are instructing someone to sign on your behalf. It authorizes another person to conduct certain transactions for you.

Here are some cases where you will need a power of attorney.

A lot of banks insist on life insurance when you take out a mortgage. If life insurance is compulsory it is important that this is mentioned in the Power of Attorney otherwise when you have this document notarized the process may be postponed because of that one technical default.

The bank is likely to insist you open a bank account with them. A bank is not allowed to open an account unless the person is physically there to sign for it. . However with a Power of Attorney which includes that the assigned person is allowed to firstly open the account and secondly the assigned person is allowed to withdraw from the account, then the problem is solved. It is also advisable that the assigned person is allowed to sign for the direct debit instructions.

However you do need to set guidelines for the Power of Attorney so that you do not become victimized by unscrupulous individuals. For example you need to set a limit on what the person can do, for how long that power takes effect, and how much power the person can have without getting your approval. Always make sure there is a time limit as well as a monetary limit.

If you are re-mortgaging or releasing capital from your property, the original Power of Attorney cannot be used unless the word “re-hipoteca” is included. Many completions have been delayed because of the lack of this power.