So, you’ve decided to go for it—you’re not just buying any property in the Mediterranean, but one on the beautiful island of Mallorca. Whether you’ve fallen in love with Palma’s historical Old Town or dream of retiring by the coast in places like Puerto Pollensa, Port Andratx, or Port Sóller, purchasing property on this stunning island is an exciting journey. However, before you seal the deal, there are a few essential considerations to keep in mind, especially if you’re unfamiliar with the Spanish legal system.
In this guide, we’ll walk you through the key steps, from legal requirements to additional costs, ensuring your path to homeownership in Mallorca is as smooth as possible.
Step 1: Get Your NIE Number
The NIE-number (Número de Identidad de Extranjero) is your all-purpose identification and tax number in Spain. Commonly referred to as your ‘nee-yeh’, this is required not only to buy property but also for most significant financial transactions in Spain. If you plan to spend more than 90 days a year in Spain, you’ll also need a NIE.
There are several ways to apply:
- In Spain in person
- Via a Spanish consulate abroad
- Through a representative in Spain
Given that appointments can be hard to get and often require weeks or months of waiting, it’s wise to leave plenty of time. You can also hire an agent to speed up the process for a fee of around €100–€200. If you choose to handle it yourself, you’ll need to complete two forms (EX-15 and 790-012), pay the processing fee at a bank, and bring your passport (plus photocopies) to your appointment. If everything is in order, you’ll receive a certificate with your NIE number.If your Spanish is limited, consider taking someone who speaks the language with you.
Step 2: Open a Spanish Bank Account
Spanish bank accounts are available to both non-residents and residents, but resident accounts tend to offer better flexibility and deals. For non-residents, a simple passport, proof of address, and employment status document should suffice, while residents will also need to show proof of residency.
Top Spanish banks include:
- BBVA: Known for fee-free accounts and great English-language services.
- La Caixa: Offers perks for non-residents, such as free interpreter phone services and legal advice.
- Sabadell: Features free transfers within the EU for amounts up to €50,000.
While Spanish banking fees are higher compared to other EU countries, platforms like Transferwise offer excellent international currency transfer rates.
Step 3: Choose a Reputable Lawyer
Although hiring a lawyer is not mandatory when buying property in Mallorca, it’s strongly recommended, especially if you’re new to Spanish real estate laws. A good lawyer will safeguard your investment by ensuring all legal matters are handled, checking for issues with the property, assisting with taxes and inheritance, and liaising with your bank.
Lawyer fees are generally around 1% of the property value (plus VAT). Make sure to choose an independent lawyer, as opposed to one recommended by an estate agent or developer, to avoid potential conflicts of interest.
Step 4: Secure a Mortgage
For those needing financing, Spanish banks offer mortgages to both residents and non-residents. Residents can typically borrow up to 80% of the property’s assessed value, while non-residents are usually limited to 60–70%. Most Spanish mortgages are variable-rate loans tied to the Euribor (European inter-bank offered rate), plus a margin.
Rather than going directly to a bank, using a mortgage broker is often the best strategy. Brokers can assess your situation and approach multiple lenders to find the best deals, usually charging around 1% of the mortgage amount (plus VAT).
Step 5: Understand Additional Costs
Aside from the purchase price, there are several other costs to keep in mind when buying property in Mallorca. These typically add up to 10-12% of the property price. Here’s a breakdown:
- Transfer Tax: Between 8–11.5%, depending on the property price.
- Notary & Land Registry: Expect to pay for the notary’s services and property registration.
- Legal Fees: As mentioned, hiring a lawyer usually costs around 1% of the property’s value.
Example for a €500,000 property:
- New Construction:
- 10% VAT: €50,000
- Transfer tax: €6,000
- Notary fees: €900
- Registration of deed: €700
- Lawyer fees: €6,050
- Total: €64,200 (12.8% of the purchase price)
- Second-hand property:
- Transfer tax: €41,000
- Notary fees: €900
- Registration of deed: €700
- Lawyer fees: €6,050
- Total: €49,200 (9.8% of the purchase price)
Step 6: The Buying Process
Once you’ve found your ideal property and agreed on a price, the typical buying process is as follows:
- Sign a Private Agreement: This document outlines the purchase price, access date, and other details. At this point, you’ll pay a 10% down payment to secure the property. If you hire a lawyer, they’ll ensure all the legal aspects are in order.
- Wait for the Closing Date: After the agreement is signed, there’s usually a 1-2 month period before closing. During this time, the remaining balance is paid.
- Finalizing the Purchase: On the closing date, the remaining amount is transferred, and you officially take ownership of the property.
Other Key Considerations
- Transparency in Pricing: Unlike in some countries, Spain doesn’t typically have bidding wars. Once both the buyer and seller agree on a price, the deal is closed. However, sellers can negotiate with multiple parties simultaneously.
- Timing: While spring and fall are the most popular seasons for buying and selling, there’s no “best” time to purchase property in Mallorca. Some buyers prefer off-peak seasons to avoid competition.
- Refund of Down Payment: If you change your mind after signing the private agreement, you’ll forfeit your down payment. If the seller backs out, they’ll need to return your down payment and double the amount.
Conclusion
Purchasing property in Mallorca is a thrilling venture, offering beautiful surroundings and a relaxed Mediterranean lifestyle. By following the steps outlined above and working with the right professionals, you’ll be well-prepared for a smooth and successful transaction. Whether you’re seeking a peaceful retirement by the coast or a city retreat in Palma, owning property in Mallorca is a rewarding investment.
To learn more about buying property in Mallorca, please contact our team.
Browse available listings in Mallorca here.
