About the Balearic Island mortgage market
We are hugely excited about the potential of these three islands when it comes to mortgage lending. The mortgage market is in good shape but there is significant space for growth as the property market and the economies in general continue to improve. We identify these islands as the ‘ones to watch’ from all of the countries in which we operate.
Spanish lenders offer a wide number of mortgage products to support you whatever your project, be that a residential or investment purchase, refinance, equity release, development or bridging finance.
As a rule, Spanish mortgage lenders tend to finance up to 70% of the value of the property, and up to an absolute maximum of 30 years on a capital repayment basis. Interest-only mortgages, though not as common as in the UK, are also available in Spain.
Larger loans, €1,000,000+, and the most competitive solutions can be found not from local Spanish banks but International Private Banks. This does not relate solely to pricing, but also how they are able to view more complex structures of a client’s income and wealth.
Key Product Highlights
- Available up to 70% loan to value (LTV), usually with little or low assets under management (AUM)
- Rates as low as EURIBOR + 1%, and can be fixed sub-2%
- Equity release available, but client must be prepared to place at least 50% AUM, unless you are prepared to absorb a 10% interest rate
- Purchase, development and straight refinance available
It’s important to consider the set-up costs for a Spanish mortgage are higher than a UK equivalent. You can expect to pay over 10% of the value of the property in taxes, as well as bank, legal and other fees. We always advise clients to seek advice from trusted consultants who have extensive experience with Spanish tax structuring and legal processes before initiating the purchase of a property in Spain.
About the Balearic Islands property market
The Balearic Islands are an archipelago of Spain in the western Mediterranean Sea.
Majorca, Menorca and Ibiza are the largest islands and are popular tourist destinations due to the Mediterranean climate and Spanish culture and cuisine. Majorca is the biggest island and renowned for its beaches and picturesque coastline, whereas Ibiza has become a luxury destination for high-net-worth individuals and property investors.
Despite recent financial troubles in Spain, the local property market, especially Ibiza, is one of the nation’s strongest and most dynamic – and with rates as currently low as 1%+EURIBOR, there has never been a better time to secure a mortgage on a property in the Balearic Islands.
As well as having financing in place, it is important to consider life insurance as well as buildings and contents insurance for your Spanish purchase, with the latter being a legal requirement when purchasing property in Spain. With our wide network of insurance and foreign exchange partners, your broker at Enness International will assist in arranging all the necessary ancillary services, to ensure all the bases of your property purchase are covered.
We have a wealth of local knowledge and experience, and through our diverse panel of Spanish and international lenders, will secure you the most competitive offering – with the minimum amount of fuss, in the minimum amount of time.