15 · Financing & Mortgages in Mallorca
*What you need to know as a non-resident buyer about loan-to-value limits, the consumer-protection law Ley 5/2019, and how the cost of credit is split — from the perspective of an independent buyer's advisory.*
Hipoteca (mortgage): residents versus non-residents#
If you intend to finance a purchase in Mallorca, the first thing to understand is how much a Spanish bank will actually lend — and the gap between resident and non-resident buyers is significant.
- LTV (loan-to-value): Residents can finance up to 80 % of the value, while non-residents are typically closer to ~60–70 %. In practical terms, that means you'll need 30–40 % of the price in equity — and on top of that roughly ~10–13 % for the purchase costs.
- Term: For non-residents, 20–25 years is the norm. The banks most likely to lend are Santander, BBVA, CaixaBank and Sabadell.
One thing to keep in mind: the ~10–13 % in purchase costs has to come out of your own pocket — they do not count towards the financeable base. So never size your liquidity needs around the deposit alone.
Ley 5/2019 (mortgage law) ✅#
Spanish mortgage law has become considerably more consumer-friendly since Ley 5/2019 — a clear advantage for you as a buyer who finances. The law protects consumers taking out property loans (BOE-A-2019-3814, in force since 16.06.2019) and grants you the following concrete rights:
- You receive the FEIN (the binding European Standardised Information Sheet) together with the FiAE containing the warning notices.
- A 10-day cooling-off period applies before signing.
- Through the
acta notarial previa(prior notarial deed), the notary documents that the deadlines were met and that you were advised free of charge — and this step is free of charge for you as the borrower.
Who bears which costs (since Ley 5/2019) ✅#
How the closing costs are split has been clearly regulated since the reform — and the split works in your favour:
- The bank bears: notary, Land Registry, gestoría (administrative agency) plus the AJD tax (Actos Jurídicos Documentados / stamp duty) on the mortgage.
- You as the customer bear: only the
tasación(the valuation/appraisal).
Early repayment (caps)#
If you want to repay the loan early, the compensation the bank may charge is capped:
- Variable rate: 0.25 % (in the first 3 years) or 0.15 % (in the first 5 years), 0 % thereafter.
- Fixed rate: 2 % (in the first 10 years), 1.5 % thereafter.
⚖️ Background: how mortgage costs are split — STS 23.01.2019 ✅#
The fact that the bank now bears most of the costs had to be fought for in court. The decisive authorities are the five STS rulings of 23.01.2019 (Nos. 44, 46, 47, 48, 49/2019) ✅, read together with the rulings of the EuGH (CJEU) C-224/19 & C-259/19 (16.07.2020, triggered by a referral from Palma de Mallorca) ✅. These set out how the costs are split, after the "all costs to the customer" clause had been declared void. (→ Ch. 23)
Tasación (valuation)#
The tasación is the only item you pay yourself within the financing — and it also determines how much the bank will lend in the first place.
The valuation is prepared by a company approved by the Banco de España (Orden ECO/805/2003; 🟡 amended by Orden ECM/599/2025). It is valid for 6 months, costs ~300–600 € (at your expense), and forms the basis on which the maximum possible mortgage amount is calculated. If the tasación comes in below the purchase price, you have to cover the difference out of equity — something you should plan for before reserving a property.
Subrogación de hipoteca (mortgage subrogation)#
The term subrogación covers two distinct situations that you should not confuse:
- Switching banks while a loan is running (Ley 2/1994, as amended by Ley 5/2019).
- Change of debtor, where you as the buyer take over the seller's existing mortgage. This can bring advantages on AJD/ITP, but requires the bank's consent.
Sources (selected)#
- Ley 5/2019 (BOE-A-2019-3814) · Ley 2/1994 · Orden ECO/805/2003 + ECM/599/2025
- STS 44–49/2019 + EuGH C-224/19 → Ch. 23