Optimal use of equity – this is how it works

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Optimal use of equity. This is how you use your equity optimally in real estate financing on Mallorca.

How much equity do I have to use optimally when buying a house? This is one of the most common questions in connection with real estate financing in Mallorca .

Basically, I recommend not choosing a Spanish bank. Your first point of contact should be your house bank in Germany. Why? It is faster, more transparent and less bureaucratic and usually costs less interest than in Spain.

But if you do decide to finance with a Spanish bank, forget the banks’ marketing gibberish. In the rarest of cases, this applies to you as a non-resident in Spain. In any case, calculate with 50% equity, better with 60%. Why is that? The Spanish bank only appraises the property. Neither the particularly beautiful sea view nor the unregistered covered pergola. That means: the bank pulls out an excerpt from the land register and evaluates the square meters entered there. Anyone who is familiar with Mallorca knows that this is usually not much…

In addition, of course, the bank does not finance any additional costs. And they amount to around 10% of the purchase price.

Calculation of the necessary equity

Purchase price of the property: EUR 1,000,000 (second purchase, ITP)

Additional costs: EUR 82,312

In detail:

Notary: 1,304

Registers: 708

History: 300

Taxes: 80,000

Total cost: 1,082,312 euros

 

The bank finances 60% of the purchase price, i.e. EUR 600,000.

The necessary equity is therefore EUR 482,312.

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