If you want to live in Mallorca, you can. This is one of the best places to live in Spain, and it gives opportunities to both residents and expatriates. The thing is that the conditions are different in the purchase of real estate, if you plan to buy the house with a mortgage loan.
In general, common mortgages for other types of applicants are usually up to 80%, but for expatriates it is capped at 70%. In addition, some higher taxes and more rigorous procedures are usually included, but it is not impossible to get it, especially if you have the right legal help.
So that you know what to do, what documents you need, and much more. Below we will tell you every detail about this type of mortgages.
Why is a mortgage for expatriates different?
That banks decide to apply other parameters in the allocation of mortgages for expatriates has to do with defaults. The mechanisms for collections and recovery are different with other types of clients, such as residents, as opposed to expatriates.
As the situation with expatriates becomes a bit more complex for banks, they have to put more controls in place to avoid losses. These are often lengthy processes that require a lot of paperwork if a client defaults on a loan.
To avoid any kind of conflict, the bank tries to cover its back, avoiding lending too much money and applying certain extra requirements. But this does not mean that it is impossible to get a Mortgage in Mallorca.
What differentiates an expatriate mortgage from the rest?
Each bank may apply different conditions to the loans it grants to expatriate clients, but generally speaking, the differences are as follows:
- Amortization terms: Amortization terms are usually shorter. The bank will want to get the money back as soon as possible and will give you less time to return the money.
- Interest: The interest applied is a little higher. There is no exact figure because each bank may apply a different one according to each case.
- Amount: The amounts provided by banks are lower. As they lend more money, the risks of not paying it all back are higher.
How much money can a bank give me if I am an expatriate?
The mortgage system in Mallorca is quite wide, so you can find banks offering better or worse conditions. To give you an idea, the maximum amount that a regular client can receive is 80%, but most receive between 60 and 70% if they meet the minimum requirements.
Now, if it is an expatriate mortgage, the amount never exceeds 70% of the value of the property you want to buy. Therefore, the amount granted can range between 50% and 60% of the value of the property.
What is the repayment term of a mortgage for expatriates?
As mentioned before, mortgages of this type have shorter repayment terms. Some common mortgages can be repaid between 24 and 30 years depending on the conditions and the client.
In contrast, expatriate mortgages have a maximum term of 20 years. The issue is that not all clients are granted the maximum term. How much it is will depend on the age of the applicant, the value of the property and other parameters.
How much interest is paid on an expatriate mortgage?
It is impossible to say an exact amount to be paid, because to determine it you must take into account the price of the property, the repayment term and of course the interest percentage applied to the amount the bank is giving you.
The first thing we recommend you to do is to start to quote in all the banks in Mallorca that can offer you a mortgage like this one. Doing so will help you to know the conditions and to compare which one seems the best for you.
But for your consideration, the interest rates are usually higher than the average, but the good thing is that in Mallorca there are many banks and some of them could offer you lower interest rates.
Is it easy to get a mortgage as an expatriate in Mallorca?
The answer to this question depends on many elements. First, it will be easier for expatriates and non-residents if they have their primary residence in a country that is a member of the European Union. If so, collecting debts will be easier than it would be to collect from someone who does not live in an EU country.
So, if you are a person coming from America to buy an apartment in Mallorca, you will have less chances to get a good mortgage, unlike if you are a person living in an EU country.
On the other hand, the applicant’s profile is very important. He/she must demonstrate that he/she is solvent, with sufficient income to cover the mortgage payments and have a good credit history. The better the applicant’s profile, the higher the percentage and the better conditions he/she will obtain.
What documents are required to apply for a mortgage in Mallorca?
For expatriate applicants, the requirements may vary according to the bank, but in general, they are as follows:
- Photocopy of ID card or passport
- Certificate of non-residence in Spain
- Copy of employment contract
- Copy of most recent payslips issued by employer
- Banking summary for the last year
- Tax residence certificate
- A tax return
- Debt cancellation receipts.
Please note that if the documents you submit are in a language other than Spanish, they must be translated. Each entity will determine some parameters for this translation and for the requirements to be validated correctly. Therefore, we recommend you to review the list of requirements of each entity, in order to speed up the process.
