Mortgage Broker for Mallorca, Balearic Islands & Mainland Spain

Novi Property Mallorca are able to bring clients the best property finance solutions. Whether you are buying a property via the Novi Property Mallorca Residential Sales Division, any other estate agency or privately, we will find the right mortgage for you. From normal repayment mortgages or fixed interest, or a combination of the two, we will seek out the best solutions for your property purchase (investment and owner occupation), or  remortgage. If you are looking to build your own home we can also help you with all your development finance needs here in Mallorca.

Just complete our Mortgage Quotation Form for a free confidential, no obligation, mortgage quote. Remember there are absolutely no commission charges for any of our services.

Set out below is some general information on why you might want to consider a mortgage and what you will need to do to complete a successful mortgage application.

Introduction to Mallorca & Balearic Islands Mortgages

When purchasing a property in Mallorca, Spain or indeed anywhere in the world, there are a number of reasons why you may want or need to consider taking out a mortgage. These in their turn will have a bearing on how and where you organise the loan. Let us firstly look at why you might want to take out a loan, then the mechanics, and finally how and who can arrange it.

Why would I want a mortgage?

  • You don't have the full amount of capital yourself to complete the purchase - the most obvious and common reason! Few of us have either the level of capital required to acquire a property out right, especially if it is a second home or, even if we do, the inclination to sink it all into one property rather than leaving some of it in other saving or investment vehicles.
  • You want to reduce liability to future inheritance tax. We will not go into detail here and nor are we, at Novi Property Mallorca, specialists in the fields of tax or general financial advice, but this is a serious consideration that is generally overlooked by purchasers.

    Interestingly there are now a number of innovative products being offered on the market which not only assist with reducing an inheritance tax liability, but also have a net income generating angle, and are thus suited to both the retired community or anyone looking for a source of additional income. It is however very important that you receive specialist advice when considering these products to ensure they fit properly with your specific requirements and risk profile.
     
    We work with two of the largest and most respected financial advisors, specialising in the expat community, so please contact us if you wish to examine any of this in more detail.
  • You want to improve your investment return ie your return on equity/capital employed. This is of particular interest if you are buying a property predominantly as an investment and will be receiving rental income. Not only will your rent generally cover your mortgage repayment liabilities, leaving you with a net cash flow, the underlying capital you have put in will be working much harder for you.

    By way of example. You buy a 200,000€ apartment and take out a 70% mortgage ie loan of 140,000€ leaving you to put in capital/equity of 60,000€. During the first year property prices go up by 10% taking the value of your property to 220,000€ ie 20,000€ increase. In this case your return is not the 10% it would have been without the mortgage, but is 20,000€ on your capital of 60,000€, ie 33%.

    If investment is your core objective, talk to us also about the advantages of fixed interest mortgages. There are some interesting fixed interest loan options out there that tap you into the historically low interest rate environment we are currently living in. Please click to Contact us.

What do I need to get a mortgage and how much will I be offered?

  • As a rule of thumb the maximum loans for non residents are 70% of valuation and 80% for residents. The market is changing constantly so contact us for the latest ratios. 
  • Loans of course are subject to status and again the rule of thumb is that the monthly repayments should not exceed 30-35% of net monthly income (again this is subject to variation so contact for details).
  • Another issue is age, specifically in relation to the term (length) of the loan. Generally the term will be no longer than the years until your 65th - 75th birthday (different banks have different rules) or, in the case of a joint loan, the years to that bithday of the youngest of the two applicants. This can have a significant impact on monthly repayment levels, the ratio between those and net income, and thus ultimately how much you can borrow.
  • As in any other European country you will need to produce proof of income (pay slips; year end tax returns etc) and liabilities (bank statements etc) to support your application. If you are serious about buying during a visit to the Island bring this information with you to help speed up the process.
  • One important point is that you do NOT need to have identified a property in order to get an "in principle" mortgage offer that is only subject to an appropriate valuation and survey, by the bank, of the property once found. Getting the bank's offer of a mortgage, costs nothing and allows you to know from the outset what your precise budget is and, once the property is identified, will assist you in moving much more quickly, and with more certainty, to signing of the Private Contract and subsequent Completion.

Where should I take out the mortgage and who can help me?

Above we have spoken about Spanish mortgages taken out on the property to be acquired. That is not of course the only option or consideration.

  • You could take out the loan against other assets or property be it in Spain / Mallorca or elsewhere. This needs to be carefully considered, particularly if the loan is in a different currency to the one you are using to buy the property ie the Euro. Irrespective of movements in the value of the underlying property, movements in the exchange rate could materially impact on your investment where the loan and property are in different currencies. Generally perceived wisdom, unless you are a professional currency speculator (!!), is to keep the loan and underlying assets in the same currency.

    Of course if you take the loan out against another property, or asset, the potential Inheritence Tax liability benefits would not accrue (see above).

    It is also important to consider how and where you will be funding the mortgage repayments from, specifically if these are from a different currency eg Sterling. Strategic Currency specialists can fix an exchange rate for up to two years for monthly transfers from the UK to Spain / Mallorca. Contact us for further information.
  • Assuming you take out the loan in Spain / Mallorca you have two main options - source the loan yourself through the main high street banks; or go via a broker. In each case your estate agent should be able to help you. At Novi Property Mallorca we have teamed up with a specialist broker in addition to having excellent direct working relationships with a selection of the most competitive banks.

    Generally the rule of thumb is the more specialised, or exacting, the mortgage required, the more beneficial it is to go via a broker with their access to the widest number of different banks and financial institutions

Just complete our Mortgage Quotation Form for a free confidential, no obligation, mortgage quote.

Other related Financial areas of interest:

  • Currency Conversion - Find information on how to obtain the best exchange rates on the market and minimise the costs relating to transfering both lump sums or regular payments from the UK to Mallorca, the Balearic Islands and Mainland Spain
  • Banking and Bank Accounts - Advice and information on choosing a Bank in Mallorca and opening a bank account.
  • Property and General Insurance - Information on Insurance policies specially tailored for foreign residents, holiday home and investment property owners. 

Property finding / search

If you have not yet started your search for a property in Mallorca, or have been unable to find what you are looking for, Novi Property Mallorca will be happy to advise and assist you including offering an exclusive property finding service to take the strain out of your property search. You may find it useful to consider some specific areas of our web site including pages highlighting properties in a number of towns / villages and regions which we have found to be amongst the most popular with our clients. Links to these areas along with lists of some of the properties we have available are set out below:

  • Central Mallorca property ( property for sale in Central Mallorca towns of Selva, Moscari, Santa Maria, Binnisalem, Sineu and many more)
  • Bendinat & Portals Property (selection of property for sale in the South West Mallorca towns of Bendinat, Portals and Portals Nous)
  • Pollensa Property (Property for sale in the Port of Pollensa, Pollensa old town and Cala San Vicente including fincas in Pollensa and a large selection of Puerto Pollensa apartments)
  • Alcudia Property (Dozens of properties for sale in Alcudia old town, Port of Alcudia and Alcudia beach including Alcudia houses, and Puerto Alcudia apartments)
  • Palma Property (specialising in property for sale in Palma old town / Palma casco antiguo property and property in Palma beach including Portixol and Es Molinar)
  • Soller Property (property for sale in the exclusive and beautiful villages of Soller, Port of Soller and Fornalutx including Soller and Fornalutx town houses, apartmnets for sale in Puerto Soller and Soller villas and fincas)
  • Alaro Property (property for sale in Alaro including rural Alaro fincas, Alaro town houses and apartments)
  • Santa Ponsa Property (property for sale in the Santa Ponsa area including Nova Santa Ponsa, Port Adriano and El Toro)
  • Port Andratx Property (luxury villas and apartments in the Port of Andratx including La Mola, Marmacen, Cala Moragues and Camp de Mar)
  • Cala Dor Property (apartments and villas for sale in Cala Dor and the surrounding coves including Marina side homes)
  • Santanyi Property (Luxury fincas and seaside homes for sale in this unspoilt and delightfully traditional area of SE Mallorca)
  • Canyamel Property (Apartments and villas for sale in Canyamel enjoying spectacular sea views and nearby access to all the local golf courses and the lovely town of Arta)

For all property for sale in Mallorca see Mallorca Property

Other Resources

For news, views and opinions regarding the Mallorca property market and the latest available investment opportunities see the Mallorca Property Market Blog