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Buying a home is one of the most important financial decisions of our lives. However, many people make a mistake that can be very costly: signing a reservation contract without having reviewed all the important aspects of the transaction.
It is common to be carried away by the excitement of having found the perfect house. The fear that another buyer might get ahead means many people pay a deposit quickly, without analysing whether they will actually be able to purchase that property.
At Hipotea We often see this situation: people who have paid thousands of euros as a deposit and weeks later discover that the mortgage does not go through or that there are problems with the property they were unaware of.
The good news is that many of these problems can be avoided if you check certain aspects before signing.
What is a reservation contract?
A reservation contract is a private agreement between buyer and seller whereby both parties commit to completing the purchase of a property within a set period.
Usually, the buyer pays a sum as a deposit, which is later deducted from the final price when the purchase is formalised.
Although this is a very common document, it should not be signed lightly, as it can have significant financial consequences if either party breaches the agreement.
What happens if you breach the contract?
Many property sales use what are called penitential depositsregulated by Article 1454 of the Civil Code.
In this case:
- If the buyer withdraws from the purchase, they lose the deposit paid.
- If the seller withdraws, they must return double the deposit.
That is why it is essential to verify what type of deposit the contract specifies exactly and what its consequences are before signing.
Precisely for this reason, reviewing the entire transaction before paying any money can save you problems later on.
The 7 aspects you should check before signing a reservation contract
1. Check that you can actually get the mortgage
This is probably one of the most common mistakes.
Many people search for a home, find their ideal property and sign a reservation contract thinking the bank will approve the financing.
But the reality is that until financial institutions study your profile and the transaction, you cannot assume you will obtain the mortgage..
Before paying a deposit it is advisable to know:
- What your purchasing power is.
- How much you may need to finance.
- Whether your income and debt levels match the usual criteria of lenders.
- If there are aspects of your profile that might make approval difficult.
At Hipotea you can perform an initial check using our Mortgage Affordability Calculatorfree tool that helps you to understand if your profile initially fits the typical criteria analysed by financial institutions.
👉 Check the viability of my mortgage
2. Make sure the property price fits your budget
Finding a property you like does not necessarily mean you can buy it.
Besides the purchase price, you will need to consider taxes and other costs associated with the transactionas well as the savings you may need to contribute.
Before signing the reservation contract, it is advisable to know the maximum price you can afford without compromising your finances.
To make a preliminary estimate you can use our Maximum Price Calculatortool which helps you to approximately calculate what property price might suit your financial situation.
👉 Calculate the maximum property price I can afford
3. Request a simple registry certificate and check if the property has encumbrances
Before paying any money, it is recommended to verify the property's registry status.
The A simple note from the Land Registry allows you to find out relevant information such as:
- Who is registered as the owner of the property.
- If there is an outstanding mortgage.
- If there are any attachments.
- If usufruct rights exist.
- If there are other registered encumbrances or restrictions.
Detecting any of these circumstances before signing can prevent delays and later problems.
4. Check the property's documentation
Before committing to the purchase, request and review the relevant documentation for the property.
Depending on the property and the transaction, it can be important to check documents such as:
- Updated simple registry note.
- The latest property tax (IBI) receipt.
- Energy performance certificate.
- Certificate regarding debts with the homeowners’ association.
- Habitation certificate or equivalent documentation where applicable.
- Cadastral reference.
It may also be advisable to verify the urban planning status and any other relevant documentation based on the specific characteristics of the property.
The more information you have before signing, the less chance there will be of unpleasant surprises during the process.
5. Review the contract deadlines
The reservation contract usually sets a deadline for signing the final purchase agreement.
This deadline must be realistic.
A mortgage transaction can require several weeks to complete. The lender will need to study the documentation, carry out the necessary checks and usually it will be necessary to have the property valued and subsequently complete the legal procedures before signing.
Therefore, Accepting a deadline that is too tight can become a problemespecially if you depend on bank financing to buy.
6. Make clear what happens if the mortgage is not approved
This point is especially important.
Many people believe that if the bank eventually denies the mortgage, they will automatically get back the deposit paid.
This is not necessarily the case.
What happens depends on the content of the contract and the conditions agreed between buyer and seller.
Therefore, when the purchase depends on obtaining financing, it is important to properly assess the drafting of a condition or clause related to obtaining financing and its consequences.
In this way, both parties can know in advance what will happen if the mortgage is not secured under the expected conditions.
If you are thinking about buying your first home and need a high proportion of financing, you can also consult our article on the ICO Guarantee 2026where we explain the conditions and the importance of previously analysing mortgage viability.
👉 Understanding the new requirements of the ICO Guarantee 2026
7. Calculate the mortgage monthly payment before committing
Getting mortgage approval is only part of the decision.
You should also ensure that the monthly payment fits into your budget and that you can afford it with sufficient margin.
Before signing a reservation contract you can use our Mortgage Payment Calculator to estimate based on factors such as:
- The mortgage amount.
- The repayment term.
- The interest rate.
👉 Calculate my mortgage payment
Knowing this information before committing to a property will allow you to make a much more informed decision.
Mistakes you should avoid before signing a reservation contract
In summary, here are some mistakes you should try to avoid:
- Signing the deposit agreement without first having studied your financing options.
- Buying a property beyond your financial capacity.
- Not checking the land registry status of the property.
- Not knowing what type of deposit agreement you are signing and the consequences of breaching it.
- Not calculating the future mortgage monthly payment before committing.
- Relying solely on verbal conversations without verifying what the contract actually states.
- Accepting deadlines that are too tight to secure financing.
- Not seeking advice when in doubt before handing over a significant sum of money.
Reviewing these points can save you financial troubles and provide much greater peace of mind throughout the purchasing process.
Checklist before signing a deposit agreement
Before handing over any amount of money, make sure you have checked the following points:
✅ I have calculated how much I can afford to buy.
✅ I have initially checked my chances of getting a mortgage.
✅ I have estimated the approximate monthly mortgage payment.
✅ I have reviewed the simple registry extract of the property.
✅ I have checked the relevant documentation of the property.
✅ I have read and understood all the clauses of the contract.
✅ I know what type of deposit agreement I am signing and its consequences.
✅ I know what will happen if I do not secure financing in the end.
✅ The deadline to formalise the purchase is reasonable.
If any of these points are still unclear, it may be advisable to resolve it before handing over the deposit.
Before signing a deposit agreement, also study your mortgage
If you need financing to buy a property, you don’t have to wait until you've signed the deposit agreement to start researching your mortgage..
In fact, doing so beforehand can give you a much clearer view of your purchasing power and help you search for properties with a more realistic budget.
At Hipotea we can assess your situation, analyse your needs and help you find financing suited to your profile.
Additionally, you have our online tools available free of charge:
This way you can approach your property search with much more information from the start.
Conclusion
Signing a deposit agreement is not just a simple formality. It is an agreement that can have significant financial consequences.
Taking time to review the transaction, know your purchasing capacity, check the property status and study your financing options beforehand can help you avoid problems and approach the purchase with greater confidence.
At Hipotea We want you to make decisions with all the information on the table. That’s why we provide free tools to calculate your mortgage payment, estimate the maximum price of property you can afford, and initially check your mortgage feasibility before taking the next step.
And if you’d prefer professional assistance, we can review your case and help you find the financing best suited to your situation.
Because a good purchase doesn’t start when you sign the deed. It starts much earlier: when you plan every step with the right information.
The information in this article is of a general nature and does not replace personalised legal or financial advice. The consequences of a deposit agreement depend on its wording and the specific circumstances of each transaction.
