Financing & Mortgage
*How non-residents finance in Mallorca — loan-to-value limits, the consumer-protection law Ley 5/2019 and who bears which costs.*
Hipoteca for residents vs. non-residents#
- LTV (loan-to-value): residents up to 80 %, non-residents ~60–70 % → equity of
30–40 % plus ~10–13 % incidental costs.
- Term: non-residents usually 20–25 years. Common banks: Santander, BBVA, CaixaBank,
Sabadell.
Ley 5/2019 (Mortgage Act) ✅#
Consumer protection for property loans (BOE-A-2019-3814, in force since 16.06.2019):
- FEIN (binding European Standardised Information Sheet) + FiAE (warning notices).
- 10-day cooling-off period before signing.
acta notarial previa: the notary records compliance with the deadlines and the free-of-charge advice —
free of charge for the borrower.
Cost allocation (since Ley 5/2019) ✅#
- Bank pays: notary, land registry, gestoría and the AJD tax on the mortgage.
- Customer pays: only the
tasación(valuation report).
Early repayment (caps)#
- Variable rate: 0.25 % (first 3 yrs) or 0.15 % (first 5 yrs), 0 % thereafter.
- Fixed rate: 2 % (first 10 yrs), 1.5 % thereafter.
⚖️ Background: allocation of mortgage costs — STS 23.01.2019 ✅#
Five STS of 23.01.2019 (no. 44, 46, 47, 48, 49/2019) ✅ + CJEU C-224/19 & C-259/19 (16.07.2020, referral from Palma de Mallorca) ✅ clarified the allocation after the "all costs to the customer" clause was declared void. (→ Ch. 23)
Tasación (valuation report)#
Valuation by a company approved by the Banco de España (Orden ECO/805/2003; 🟡 amended by Orden ECM/599/2025). Valid for 6 months, cost ~€300–600 (paid by the customer). Decisive for the maximum mortgage amount.
Subrogación de hipoteca#
Switching banks with an existing loan (Ley 2/1994 as amended by Ley 5/2019) or a change of debtor (the buyer takes over the seller's mortgage — can bring AJD/ITP advantages, requires the bank's consent).
Sources (selection)#
- Ley 5/2019 (BOE-A-2019-3814) · Ley 2/1994 · Orden ECO/805/2003 + ECM/599/2025
- STS 44–49/2019 + CJEU C-224/19 → Ch. 23
What the bank actually checks — debt-service ratio 🟡#
The LTV decides how much the bank lends — the debt-service ratio decides whether at all. For buy-to-let buyers it is the tougher filter, yet it appears in no statute.
- The 35 % rule 🟡: the new instalment plus all existing loans should not exceed 35 % of net income — a recommendation of the Banco de España that lenders follow. Very solid profiles reach 40 % at some banks; others treat 35 % as a hard ceiling.
- Non-residents: verifiable income in the home country is mandatory. The ratio is calculated against that net income.
Does rental income count?#
- Projected rent from the property being bought 🟡: counts for little. It is treated as ingreso variable y condicionado — future, uncertain, unverifiable.
- Existing, tax-declared rent from other properties 🟡: counted, but conservatively — typically 60–70 % of net rent, provided it appears in tax returns, often with two years of history. An existing mortgage on that property is deducted.
- No uniform rule — every bank applies its own criteria; some disregard rental income entirely.
🔴 What this means: anyone planning on "the rent pays the mortgage" will usually not get financing — not because of the property, but because verifiable income does not carry the 35 %. Do this calculation before the property search, not after.
Does it carry itself? The calculation before the search#
Example: €250,000 purchase price, 35 % equity (≈ €162,500 loan), 25 years, 3.5–4 % — monthly requirement:
| Item | per month |
|---|---|
| Mortgage instalment | €815–860 |
| IBI, comunidad, insurance, reserve | €165–325 |
| Total | approx. €1,000–1,150 |
On top of that come 10–13 % purchase costs (→ ch. 4), which are not financed.
🔴 The income side is the open half of this calculation. Owners who want to use the property themselves let it only part of the year — at seven months out of twelve, roughly a third is missing. And a long-term tenancy binds you for 5 years (7 for legal entities, → ch. 13): during that period there is no access for the owner.
⚠️ Rent levels never come from our data. Property Guys lists sale properties only — rentals are deliberately not part of the inventory. Any rent figure in advice is external research and must be quoted with source and date.