Want to get a Spanish mortgage to buy in Mallorca? Our UCI contact can help

by Aaron Strutt

Jul 01 2023

Mallorca remains one of the most popular islands of the Mediterranean for property investors, second-home buyers and holiday-makers alike.

While many people dream of buying a holiday home in Spain, most do not know how to secure an overseas mortgage or whether they can refinance their property(s) to access the funds to buy somewhere outright. Providing they have enough equity. 

As London-based brokers, we can help clients refinance properties in the UK to buy in Spain with cash. Our contact, David James Naylor, answers ten questions about the mortgage and buying process in Mallorca.

1) Do many of your clients buy in Mallorca? 

Yes, Mallorca is a trendy option, but it tends to be the higher end of the spectrum.

2) Can British people buy any of the homes on the island (Mallorca)? Are there any restrictions?

Yes, the British can buy any home on the island but curiously since Brexit there are some rural properties for which Brits need to obtain a military permit before notary completion can happen, which can slow down proceedings by a couple of months.

3) What are the taxes a British person needs to pay when they purchase a home in Mallorca?  

For second-hand properties, the ITP tax is a sliding scale between 8-13%. For new builds, it is VAT tax at 10% and AJD tax at 1.50%.

4) Some of the homes in Mallorca are very expensive. How much of a deposit would you need to buy a property?  

Yes, indeed, some of the most exclusive properties are to be found in the Balearic Islands. To a non-resident, the maximum amount it is possible to finance is 70% loan-to-value for loans up to €1 million. From €1 million to €1.5 million 60% and from €1.5 million to our maximum loan size of €2 million 50%.

5) How long would it take to get a mortgage to buy in Mallorca? 

Typically, we can arrange a mortgage in principle agreement within a week of receiving the customer documentation. Afterwards, we arrange the property valuation which will be another week or so. Once we have all the checks done, we issue the binding mortgage offer documentation and then we have to wait for a cooling-off period of 10 days to pass by law before completion can happen at the Spanish notary.

6) What mortgage rates do UCI offer? Fixes or trackers?  

Currently, we have a one, a five and a 10-year fix, after which the mortgage would revert to a variable (Euribor + margin). The 5-year fix is currently 5.15% after Euribor + 1.59 with no products linked to the rate. 

7) Can properties with a UCI mortgage be let out? 

Yes, it is okay. Most customers rent their properties out when not using them for their own holidays.

8) What other parts of Spain are as popular as Mallorca? And Can you arrange mortgages across the country? 

Talking in terms of the same exclusivity, I would say the rest of the Balearics and on the mainland Marbella and Sotogrande. And yes, I help my clients to buy across Spain, and also the Canary Islands.

9) How much would someone need to earn to borrow 500,000 euros?  

Ratios work on a debt-to-income basis in Spain, which always has to be below 40%. So, for example, if a couple has an existing UK mortgage of £2,000 a month, then we need to demonstrate an annual income after taxes of around €160,000.

Need a Spanish mortgage to buy in Mallorca? 

Contact David James Naylor, a Mortgage Consultant at UCI. His email is david.james@redext.uci.com mobile/WhatsApp +34 693 460 518 - Please mention this article.

UCI was established in 1989 through a joint venture between two of the biggest European Banks, UCI (Unión de Créditos Inmobiliarios) is a Credit Institution in Spain specialising in mortgages for property in Spain authorized by the Bank of Spain (Banco de España) and subject to its supervision.

The information contained within was correct at the time of publication but is subject to change.

YOUR SPANISH PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE. IF YOUR MORTGAGE IS IN EURO, CHANGES IN THE EXCHANGE RATE MAY INCREASE THE AMOUNTS YOU HAVE TO PAY UNDER YOUR MORTGAGE.