Applying for a mortgage in Ibiza: how does it work?

Important requirements for a Spanish mortgage

Do you want to apply for a mortgage at a Spanish bank? Then keep in mind that this is subject to a number of conditions:

• At least 40 percent from your own resources
  Unlike in the Netherlands, in Spain (and therefore also on Ibiza) you have to finance at least 30 to 40 percent of the property yourself. It is a condition imposed by banks, because they finance a maximum of 60 to 70 percent. For a house worth €350,000 that means you have to put in €105,000 to €140,000 yourself.
• Purchase costs at your own expense
  On top of that you have to pay the buyer's costs yourself. These vary in Spain, but if you calculate with 10 percent of the purchase price you will often be fine. It involves costs such as transfer tax, notary fees and registration fees. For a house of €350,000 this is €35,000.
• Sufficient income
  You must have sufficient income to apply for the mortgage. Moreover, it is important that you can actually demonstrate this income. The income may be earned from employment, self-employment, rental income or income from assets. Keep in mind that you can spend about 35% of your income on housing costs.
• Stable personal situation
  Finally, Spanish banks will assess your personal situation. What is the family composition, do you have a rental or owner-occupied home and what is the age of any children? The bank will take a critical look at the type of work you do and the type of income you earn through it.

Mortgage types, term, interest and closing costs

A mortgage on Ibiza is actually always an annuity mortgage. There are hardly any other forms available. There are possibilities to finance without repayment, but that is not common.

Keep in mind that banks in Spain make the maximum term depend on your age. Many banks use a final age of 75. So are you 60 years old? Then the term may still be up to 15 years, based on annuities.

Mortgages in Spain often have a variable interest rate, based on the Euribor rate. This means that the rate can vary per year. There are initiatives with fixed interest rates for a longer period, but this is not as common as in the Netherlands.

Keep in mind that the closing costs for a mortgage are a lot higher than in the Netherlands. It is about 3.5 percent on average. This is the rate for the closing commission, tax on the mortgage, notary fees, registration fees and appraisal fees.

Applying for a mortgage on Ibiza

Want to apply for a mortgage in Ibiza or have questions about our services? Please contact our office in Ibiza or in the Netherlands. Of course we speak English.