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Location: San Francisco, USA
The Balearic Islands are an archipelago of Spain situated in the western Mediterranean Sea. The Islands are best known for Majorca (also known as Mallorca) and Ibiza, which is a favourite for non-resident buyers, Americans included.
Menorca is also part of the Balearic Islands – it has a reputation for being quieter than both Majorca and Ibiza, but also has less prime property on offer. Menorca is becoming more sought-after however, and high-value and luxury property is becoming easier to find as more people look to buy on the island.
The Balearic Islands are all top tourist attractions. That said, Majorca and Ibiza are better known and are more popular with international property investors. The Ibiza property market is often compared to London’s given there is plenty of prime real estate to choose from. In Majorca, you will also find prime real estate on offer with prices to match, although there the island has lots of property at different price points.
On mainland Spain, the mortgage market continues to recover from the 2008 financial crash and repossessed stocks currently held by domestic banks are slowly being sold off.Get Started
Majorca has the broadest spread of property prices and types out of the three mean Balearic Islands. With a permanent population of around 850,000, and regular yearly tourist numbers of more than 25 million, the economy is largely dominated by tourism. It also remains a popular choice for German, British and Scandinavian real estate investors interested in purchasing Spanish property.
Property prices in Majorca can vary, beginning at around €6,250 per square metre all the way up to €10,000 per square meter for prime real estate. Over the past ten years, construction of newbuild properties has fallen from over 12,000 a decade ago, to just 1,842, and this has reduced the availability of newbuilds, particularly in Majorca. This is due to the Balearic government’s proposal to preserve the region’s environment from damage caused by over urbanisation. As a result, many property investors are looking to buy and redevelop existing Majorcan properties.
Of the three islands, Menorca is far quieter than Majorca and Ibiza, despite still being a popular tourist destination. Property prices here average €3,350 per square metre, which is significantly less than property in Majorca and Ibiza.
Although Menorca has less high-end property available than the more popular islands, this does not mean the island has no luxury property to offer. In fact, Menorca offers a variety of high-value apartments, homes and estates, although certainly far fewer than Ibiza and Majorca. A positive advantage to this is that many Menorcan properties come with significant grounds, with some also having private sea access, which can be a rarity on more popular Balearic Islands.
Menorca’s less expensive property market, along with fewer visitor numbers, means the island is particularly favoured by those looking for peace, tranquillity and privacy.
In terms of other islands in the Balearic archipelago, many of these smaller islands are often overlooked and have less well-developed property markets, despite offering many of the same attractions as their more famous counterparts.
Spain is one of the more accessible European countries for real estate purchases and Americans can buy Spanish real estate. Compared to other European countries (some of which place stringent restrictions on who can buy and own property), US citizens can buy Spanish real estate with relative freedom. As an American citizen, you are also able to generate rental income from Spanish real estate.
You will need to get advice on any entry requirements and regulations before you consider buying a Spanish property to ensure there is nothing to limit you from visiting Spain. As an American citizen, you are usually able to visit and stay in Spain for a period of 90 days without a visa. If you plan to spend longer in the country in a single trip, you may need to apply for a visa (after the 90 days, you will need to leave Spain and will only be able to enter again without a visa after a continuous period of 180 days).
Spanish mortgages can be complex to arrange for US citizens, but Enness will be able to negotiate and secure property finance options for you, regardless of how much you want to borrow or your requirements, nationality or background.
If you wish to explore Spanish residences, Spain also offers Golden Visas for individuals who buy a home worth more than EUR 500,000.
Domestic mortgage providers in Spain have been extremely risk-averse since the 2008 financial crisis, which means they remain especially cautious when it comes to American buyers purchasing prime real estate. In some cases, Spain's commercial banks can lend to international buyers, but they tend to be focussed on lower-value properties and non-US citizens or residents.
If you are an American investor buying prime property in Spain, you are likely to find that lenders will turn you down on the basis of your nationality and the amount you want to borrow. This isn’t to say you are not a quality borrower or that you will not be able to secure a mortgage, but typically reflects Spanish banks’ hesitation to offer anything but the very simplest of mortgages to resident or "local" European buyers. Particularly if it is the first time you are buying European property as an American, it is also helpful to know that getting a Spanish mortgage does not necessarily mean that you need to use a Spanish bank. Many international and non-resident borrowers in Spain use lenders based in other European jurisdictions for a Spanish mortgage. Europe’s private banks and niche or alternative lenders (including non-bank institutions) can offer more flexibility and better rates than large Spanish lenders. As an American buying in Spain, these lenders are likely to offer the best property finance package to you, too.
While these lenders are likely to offer you the best Spanish mortgage as an American citizen or resident, applications are not a case of simply asking via their website.
If you are a high-net-worth individual or want to buy luxury property in Spain, you are also unlikely to want an off the shelf package deal. Local lenders and those not accustomed to working with high-net-worth individuals or Americans tend to offer Spanish mortgages that cannot be tailored to your specific situation and will not account for your global wealth, income or assets.
Enness will be able to source and negotiate the most competitive Spanish mortgage through the firm’s network of more than 500 global lenders. Your broker will approach lenders who can cater to you as an American borrower and that will facilitate transactions quickly and efficiently, negotiating to reduce your overheads as much as possible, and explaining your mortgage options to you, including how you pay interest, what you pay, loan to value and other factors.
Given the climate, culture and lifestyle Spain offers, Andalusia and the Balearics Islands are popular with US investors, particularly those looking for holiday property in Europe. Prime real estate is often cheaper than that in neighbouring France but with all the same amenities. There are very few restrictions property ownership in Spain, although tax implications and your ability to own in the country should always be explored up front.
When it comes to Spanish mortgages for US residents or American citizens, most local high street lenders will not be able to work with you. These lenders like very "plain vanilla" mortgage deals and as an American borrower, you will almost certainly fall out of this category by default. Most mainstream Spanish lenders do not offer Spanish mortgages to US residents at all, and you will find it beneficial to work with a broker that can help you access more lenders.
Private banks, in particular, are better able to offer Spanish mortgages to US residents, given that they are more flexible with regards to assessing borrower risk and they can better meet the sometimes-complex requirements for onboarding and lending to you as an American. Niche and alternative lenders are also well-equipped to work with American borrowers and along with private banks, many can lend to you even if they do not have a Spanish base – London-based private banks can offer Spanish mortgages, for example.
If you are an American citizen or resident and you are retired (even if you have significant wealth), you are an entrepreneur or own a business or the majority of your wealth is tied up in property or other illiquid assets, private banks and niche lenders are also likely to be the best port of call for a Spanish mortgage.
If you want a mortgage for a Spanish property, Enness will be able to connect you with international and alternative lenders who will be able to offer competitive and flexible finance. Enness have worked with many American buyers and have a track record helping them to secure mortgages as a non-resident.
Given their popularity as destinations, Ibiza and Majorca offer the most prime property in Spain and naturally, real estate comes with a price tag to match meaning liquidity is essential. The Costa del Sol also offers a good stock of luxury property making the Balearics and region around Marbella popular for international and American buyers.
Enness have access to more than 500 private banks and international lenders. This network includes banks and niche lenders who can easily cater to American investors buying property in Spain. Typically, mainstream Spanish banks will find it hard to support you as an American borrower, especially do if you have global assets, multiple income streams and so on. In the wake of the 2008 financial crisis, local banks lend with caution and with a very inflexible and limited attitude to risk, which means they only take on very straightforward international loans and prefer lending to Spanish residents.
The lenders that can cater to American borrowers buying in Spain will be able to consider all of your assets (in Europe, the US or elsewhere). As a result, they can usually accept different types of security as collateral, which can open more avenues of opportunity for you when it comes to a Spanish mortgage.
When Enness work with American buyers, the team will always look at minimising costs, maximising the use of your assets and arranging the mortgage as quickly as possible.
Costa del Sol and Balearic Island mortgage product highlights include:
Enness also have access to the lenders that will be able to lend to you in the most efficient way, either considering elements like income from a trust, multicurrency income, future liquidity events or using structures to structure the loan, as advised by your professional team.
Whenever you buy international property, it is imperative to consider wider tax implications and understand how they will affect you. As an American buying property in Spain, this is particularly important, and you will need to seek expert advice to ensure you understand any potential impact on your situation.
As well as the property itself, there will also be other charges to consider – these are not always the same as you’d see in the US. Usually, the obligatory charges relating to Spanish property purchases amount to about 10% of the property price. If you plan to rent out your Spanish property, Spanish income tax will also be applicable, as will Capital Gains Tax when you sell the property. You will also need to check you have insured your property in line with Spanish regulations.
Taxation in Spain is not the same as in the US and consulting with lawyers, advisors and tax experts will be necessary to ensure you are aware of your liabilities, what you need to pay, when any relevant payments will be due and that you are making the right declarations with regards to your Spanish property. Enness has access to an unparalleled network of English-speaking advisers in Spain and the Balearics, and the team can connect you with these service providers if you would like an introduction.
Per the advice of your team in America and the US, Enness will be able to support you in securing a Spanish mortgage in the way that is most tax-efficient and cost-effective for you. At the top of the market, mortgages are not inflexible one-size-fits-all products and Enness can approach lenders and negotiate a Spanish mortgage that best meets your needs in terms of structure and delivery.
With a track record supporting American borrowers and with a sound understanding of the Spanish fiscal landscape, Enness will consider the legal and regulatory factors alongside your advisers to get the most competitive Spanish mortgage with regards to rates and terms. Enness will also be able to utilise your complete portfolio of worldwide assets to reduce headline mortgage costs.
One of the leading brokers in international mortgages, Enness has a track record helping Americans to finance real estate purchases in Europe in the Costa del Sol region and in Majorca and Ibiza. If you are considering buying Spanish property and want to learn more about how Enness can help you, get in touch, The team will be delighted to talk you through your options and answer any questions you have.Get Started Now