11 Dec Buying a home with deferred payment: What conditions should you know about?
Buying a home is one of the most important financial decisions in life, but sometimes, you may not have the full amount needed to cover the total price of the property. However, there is a way to acquire a home without needing a mortgage or having all the money upfront: a purchase with deferred payment. Although this option is not very common, it is completely legal and can be beneficial in certain cases.
What is a deferred payment purchase?
This type of agreement allows the buyer to avoid paying the full price of the property at the time of the transaction. Instead, a payment schedule is established, offering flexibility to pay the amount in several instalments over a set period. This is ideal for people who cannot access a mortgage loan or who need time to gather the necessary funds.
Typically, the buyer makes an initial payment, which acts as a guarantee, and then makes monthly payments until the full price of the property is covered. During this process, the buyer may live in the property, although they do not become the legal owner until the payment is completed and the deed is signed before a notary. It’s important to note that both the initial deposit and the monthly instalments are considered part of the total price of the property.
While this arrangement offers advantages—such as the ability to live in the home while completing payments—it also carries risks. The buyer could lose the money already paid if the purchase is not finalized, and they do not have full rights over the property until the deed is formalized. For the seller, the main drawback is not receiving the full payment upfront, which could affect their liquidity.
In Barcelona, some real estate agencies like Barcelona Flat Hunter can provide guidance on these types of transactions, ensuring that both parties understand the terms and protect their interests. Regarding taxation, a deferred payment purchase is subject to taxes based on the total value of the transaction, which must be paid when the purchase contract is formalized—regardless of whether the payment is deferred in full or in part.
Although rare, this type of agreement offers an interesting alternative for those looking to buy a home more flexibly, as long as there are guarantees in place for both parties involved.
