Hi everyone! I’ve been researching buying a house lately and came across something that doesn’t seem to be discussed much in forums but is actually quite common. Besides the well-known bank mortgage, when buying a new property, there’s also the option of a developer installment plan.
These developer installments are mainly for properties that are still on the drawing board or under construction—what’s known in Spanish as ‘sobre plano.’ Simply put, instead of paying the full amount upfront or starting mortgage payments immediately, you pay a portion of the property price to the developer in stages during the construction period. This can significantly ease the financial pressure for those who don’t have all the funds available at the beginning.
What Does the Payment Process Typically Look Like?
Each developer’s policy might differ slightly, but they generally follow a similar structure. I’ve put together a common process based on information about Spanish mortgages for you to reference:
| Payment Stage | Payment Percentage | Description |
|---|
| Reservation Deposit | €6,000 - €10,000 | Paid upon signing the reservation agreement to secure the unit. This is usually a fixed amount. |
| Down Payment | 10% of the property price | Paid when signing the official purchase contract, with the reservation deposit deducted. |
| Installments During Construction | 10% - 20% of the property price | Paid in one or more installments over the 1-2 year construction period. |
| Final Payment | Remaining 70% - 80% | Paid upon completion, when you receive the keys and sign the public deed of sale. This portion is typically covered by a bank mortgage. |
Important Points to Note!
There are a few key points about buying a property in Spain that you must pay attention to. The most crucial is the Bank Guarantee (Aval Bancario)! After paying the deposit and down payment, you must ensure the developer provides you with a bank guarantee. In the unfortunate event that the developer goes bankrupt or the project fails, this guarantee ensures you get your money back. Also, remember that the VAT (IVA) on new properties in Spain is 10%, and this tax is paid proportionally with each installment, not all at the end.
This installment method gives buyers a buffer, allowing more time to arrange for the final payment or secure a mortgage. Of course, choosing a reputable and financially solid developer is the prerequisite for all of this. I hope my sharing helps those of you who are currently house-hunting. Feel free to share your experiences in the comments below! Wish me luck on my property journey haha!
