Mallorca, the pearl of the Mediterranean, attracts dreamers from all over the world. The promise of a sunny lifestyle, the beauty of its landscapes, and the vibrant island culture make it a coveted destination both for establishing a residence and for making a strategic investment. However, for many, this dream faces a complex reality: the bureaucratic and financial maze of buying property in Spain, especially for those who are not residents in the country.

The real estate market on the island, although dynamic and full of opportunities, is demanding. The particularities of financing for non-residents, managing documentation, and navigating a specific legal and tax framework can turn what should be an exciting experience into a source of stress. This is where the figure of the mortgage broker in Mallorca emerges as an indispensable partner. More than a mere intermediary, the broker becomes the expert ally who guides, advises, and simplifies every step of the process, ensuring a mortgage that not only fits the client’s needs but also transforms the path to ownership into a smooth and secure journey.

2. X-ray of the Real Estate Market in Mallorca (2025): A Landscape of Opportunities and Challenges

2.1 A Market in Sustained Growth

The real estate market in the Balearic Islands remains on a robust growth trajectory, consolidating itself as one of the most dynamic in Spain. The most recent data from July 2025 reveal that the average price per square meter in the Balearic Islands has surpassed €5,000, a year-on-year increase of 13.0%.¹ This price escalation is not an anomaly but a sustained trend, as the Balearic Islands have broken the purchase price record reached during the previous housing bubble.³

The capital, Palma de Mallorca, is a clear example of this phenomenon, with an average price per square meter of €4,951 in July 2025, representing a year-on-year increase of 18.8%. This increase reflects high demand clashing with limited supply, a situation that is worsened in the luxury segment. Despite global economic uncertainties and rising interest rates, the luxury property market on the island has remained notably resilient, with prices in this sector expected to remain stable or even continue rising in 2025.⁴This steady growth is largely driven by the demand from high-net-worth buyers seeking a safe haven for their wealth on the island.

The Balearic market as a whole presents a paradox: while prices are soaring, the country faces a “structural housing crisis” with a projected deficit of 600,000 homes by 2025.⁶ This mismatch is not due to a lack of interest, but to insufficient supply, driven by a shortage of ready-to-build land, slow construction permitting processes, and a lack of labor.⁸ The implication of this situation is that buyers are operating in a seller’s market, where speed and financial strength are crucial. A mortgage broker becomes indispensable in helping a buyer stand out from the competition and ensuring their profile is the most attractive to the financial institution.

2.2 Foreign Demand: The Key Driver

Foreign demand is not a secondary player in the Balearic market but its main driver. Non-national buyers account for over 30% of home sales in the Balearic Islands, a figure that contrasts with the national average, which is just over 15%.⁵ The predominant nationalities in this market are Germans, British, Scandinavians, and Americans, who are primarily seeking second homes or luxury properties.

This intense interest has fueled a political debate about the possibility of limiting property purchases by non-residents on the island.¹¹ The Balearic Government, however, has opposed this measure, arguing that it violates the free market and the fundamental rights of the European Union. Instead, it advocates for alternative and less restrictive solutions, such as simplifying administrative procedures to speed up the construction of new homes.¹³

The tension between public perception and available data on the housing crisis warrants a deeper analysis. While the debate often blames foreigners and tourist rentals for the price escalation, a PwC report from late 2024 emphasizes that 89.7% of the variation in national housing prices is explained by structural demand variables, such as demographic shifts and new household formation. The study also notes that short-term rentals represent only 1.3% of the total housing stock and that, in cities like Palma, regulation has failed to curb the rise in rental prices.¹⁴ The reality is that the housing crisis is a multifactorial problem of a structural imbalance between supply and demand, and strong foreign demand simply highlights the need for comprehensive solutions for buyers looking to invest in this market.

2.3 The End of the Golden Visa: What Are the Implications for the Investor?

As of April 3, 2025, Organic Law 1/2025 came into effect, eliminating the so-called “Golden Visa” for real estate purchases. This visa, introduced in 2013, allowed non-EU citizens to obtain a residency permit in exchange for a real estate investment of €500,000 or more.

Although Golden Visas represented a minimal percentage of the total transaction market (just 0.3% between 2013 and 2025), their elimination has created some legal uncertainty, especially among luxury investors. However, purchasing a property in Spain remains a viable option for long-term residency through other avenues. Among the available alternatives are the Digital Nomad visa for remote workers, the visa for Highly Qualified Professionals, and the Non-Lucrative Residency visa for those who can demonstrate economic solvency without needing to work in the country.¹⁵ For investors looking to capitalize on Mallorca’s luxury market, these alternative options, coupled with solid financial planning, allow them to proceed with their investment plans.

3. Buying vs. Renting on the Island: A Strategic Decision in 2025

The decision between buying or renting a home is one of the most significant a person can make. In the current context of 2025 in Spain, this choice has become more complex, but financial data tips the scale toward buying as the more strategic long-term option.

3.1 The Financial Advantage of the Homeowner

In 2025, one of the most notable market realities is that, in many areas, the monthly mortgage payment can be lower than the rent price.¹⁷ A report from June 2025 indicates that tenants pay on average €400 more per month compared to the average mortgage payment.¹⁷This phenomenon has led to mortgages becoming the most cost-effective option in all autonomous communities.¹⁷

In addition to the monthly cost advantage, buying a home allows for the accumulation of net worth, unlike renting, where the monthly payment generates no assets. ²⁰ Each mortgage payment not only reduces debt but also increases the owner’s wealth, especially in a market where housing prices are expected to continue rising in the coming years. ²³ Homeownership also offers invaluable stability, freeing owners from the uncertainty of rent increases and the possibility of the landlord deciding to sell the property. ²⁴ This stability is a key emotional and financial factor for those looking to put down roots and plan for the long term.

3.2 The Flexibility and Challenges of Renting

On the other hand, renting offers a series of advantages that suit specific profiles. The main one is flexibility, which allows people to change residence more easily in response to job or personal changes, without the long-term commitment that a mortgage entails.²⁵ Additionally, the initial outlay for renting is significantly lower than that required for a purchase (usually, just a security deposit and the first month’s rent).²⁶ Tenants also benefit from less responsibility for maintenance and unforeseen repairs, which are typically covered by the landlord.²⁰

However, renting has a major drawback: it does not build equity, which makes each payment feel like an expense rather than an investment.²⁴ Instability is another factor, as the landlord may decide not to renew the lease, forcing the tenant to find a new home in a rental market that has become 57% more expensive since 2015.¹⁴

3.3 The Investor and the “Buy-to-Let”.

For investors, the “buy-to-let” strategy is attractive in theory. However, in Spain, banks do not offer specific mortgages for this purpose and do not consider future rental income when calculating the debt-to-income ratio.²⁷ This means that even if an investor plans to rent out the property, they must demonstrate solid and sufficient financial solvency to cover the mortgage without relying on that projected income. This underscores the importance of having an impeccable financial profile for the transaction to be viable.

Below is a comparative table for a quick and clear view of both options:

Feature	Buying	Rent
Equity Building	Yes, each mortgage payment increases personal equity	No, the monthly payment does not generate assets
Stability	High, not subject to rent increases or non-renewals	Low, the landlord can raise the rent or not renew the lease
Flexibility	Low, changing residence involves selling or renting the property, a long and costly process.	High, you can move to a new home with relative ease at the end of the lease.
Initial Cost	High, a minimum saving of 30-40% of the property value is required (down payment + expenses).	Low, only the security deposit and the first month’s rent are needed.
Maintenance and Expenses	Total, the owner is responsible for all repairs, taxes, and fees.	Minimal, the landlord covers most maintenance costs and property taxes (IBI).

4. The Mortgage Roadmap: Process and Requirements for Foreigners and Investors

Purchasing a property in Spain is a multi-stage process. For a non-resident buyer, this path is filled with specific details that an expert mortgage broker is equipped to handle.

4.1 Financing: Less Percentage, More Requirements

The first and most important step for a foreign buyer is to understand the differences in financing. Mortgages for non-residents have stricter conditions than those for tax residents in Spain, regardless of their nationality.²⁹

Loan-to-Value (LTV) Percentage: While residents can qualify for an LTV of up to 80% of the appraisal or sale value, non-residents typically obtain between 60% and 70%.³¹ This means the buyer must have considerable savings, ranging from 30% to 40% of the property price, to cover the down payment and associated costs.³³
Debt-to-Income (DTI) Ratio: The sum of the new mortgage payment and other debts cannot exceed 30-35% of the applicant’s net income, a rule that banks apply rigorously to mitigate risk.³²
Interest and Terms: Financial institutions perceive greater risk in transactions with non-residents. Therefore, interest rates are usually higher (between 3% and 4%) and repayment terms are shorter, with a typical maximum of 20 years.²⁹

The documentation for a non-resident is also more extensive and must be submitted in Spanish, often with a sworn translation.³⁴ Among the most requested documents are the NIE (Foreigner Identification Number) and passport, a tax residency certificate, employment contracts and payslips, bank statements, and, crucially, a credit risk report from the country of origin.

4.2 The Step-by-Step Process: Simplifying Bureaucracy

The purchase process, from choosing the property to the final signing, can take between 15 days and three months, although it is most commonly completed in about one month.³⁶ However, this process is fraught with potential points of failure that can cause significant delays or even the denial of the mortgage.³⁷

This is where the value of a broker like AvalTeca is maximized. The broker acts as a risk manager and a strategic consultant, proactively identifying and resolving problems.

Initial feasibility study: The broker analyzes the client’s financial profile before starting the property search, which ensures that the offers presented are realistic and viable.³⁹
Property appraisal: The property appraisal is essential to determine the maximum mortgage amount. A broker can expedite this process, which is completed in about two days once the property documentation is in order, and can help resolve potential discrepancies if the appraisal value is lower than the sale price.³⁶
The binding offer (FEIN): Once the feasibility study is approved, the bank issues the European Standardised Information Sheet (FEIN), a binding offer for the bank but not for the client.⁴¹ The client has a reflection period of 10 calendar days (14 in Catalonia) to review the offer and ask questions before signing.⁴¹
The signing before a notary: The Mortgage Law requires two visits to the notary. The first is free, for the informational notarial act, which must be done at least 10 days before the final signing. The second is the signing of the mortgage loan and the public deed of the property.³⁶ The mortgage broker accompanies the client in this final phase to ensure the entire process proceeds without any issues.³⁹

Having a mortgage broker not only speeds up the process and reduces stress but also mitigates inherent risks, such as losing the deposit (arras) due to unexpected financing issues.³⁷ By managing the documentation and performing legal and registry checks, the broker ensures that the client does not face unpleasant surprises, turning uncertainty into security.⁴³

5. Expenses and Taxes in the Balearic Islands: A Clear Guide for Your Investment

A fundamental part of the purchasing process, especially in the Balearic Islands, is understanding the associated expenses and taxes. Often, these costs can represent between 10% and 15% of the property’s price.²⁸

5.1 Purchase Taxes: ITP vs. VAT

The main tax depends on the type of property being acquired:

Property Transfer Tax (ITP): This applies to the purchase of second-hand homes. In the Balearic Islands, the ITP is calculated progressively in brackets, applying a different tax rate to each segment of the property’s value. The updated brackets for 2025 are as follows:

Property Value	Tax Rate
Up to €400,000	8%
From €400,000.01 to €600,000	9%
From €600,000.01 to €1,000,000	10%
From €1,000,000.01 to €2,000,000	12%
Over €2,000,000	13%

It is crucial to understand that this tax is progressive and cumulative. For example, on a €500,000 property, you would pay 8% on the first €400,000 and 9% on the remaining €100,000, for a total of €41,000. Additionally, there are tax breaks for specific groups such as young people under 36, large families, or people with disabilities, who can benefit from a reduced rate of 2% or even a 100% tax break under certain conditions and with a maximum property value established.⁴⁵

Value Added Tax (VAT): This applies to the purchase of new-build homes, at a fixed rate of 10%.⁴⁷ To this tax is added the Stamp Duty (IAJD), which in the Balearic Islands is 1.5%.⁴⁷ ITP and VAT are mutually exclusive, so a transaction will only be subject to one of them.⁴⁵

5.2 Other Costs to Consider

Beyond taxes, there are other expenses that the buyer must account for in their budget:

Notary and Registry: Notary and Property Registry fees are regulated by law and vary depending on the property price.
Administrative Agency (Gestoría): Hiring an agency for tax processing and registry inscription may have an additional cost, although in the case of a mortgage, these expenses are covered by the bank.⁴⁸
Legal Advice: Hiring a specialized lawyer is highly recommended, especially for foreign buyers. A lawyer can review the property’s documentation and contracts to protect the buyer’s interests, with fees typically around 1% of the property price.

A complete understanding of these costs is vital to avoid surprises and to ensure the buyer has enough capital to cover all expenses in addition to the 30-40% savings required for the down payment.

6. AvalTeca: The Comprehensive Solution for your Mortgage in Mallorca

In a market as complex and competitive as Mallorca, the role of a mortgage broker rises from simple intermediation to a comprehensive consulting and management service. AvalTeca positions itself as the strategic partner that maximizes opportunities and minimizes risks.

6.1 The Broker’s Strategic Role: More than an Intermediary

The main advantage of working with a broker is their independence. Unlike a bank agent who can only offer their institution’s products, a broker like AvalTeca works with multiple banks.⁵⁰ This allows them to access a much broader spectrum of offers, seeking the conditions that best suit each client’s specific profile, even for those with higher-risk profiles.

This independence translates into expert negotiating power. A broker not only finds the offers but also negotiates directly with banks to secure lower interest rates, reduce fees, and eliminate unnecessary tied products.⁵¹ This ability to negotiate simultaneously with multiple entities saves the client an invaluable amount of time and effort that they would otherwise have to spend on individual meetings and comparisons.⁵³

Outsourcing this process to a broker is, in fact, a resource management strategy. Purchasing a property is a long process filled with paperwork. By trusting a broker, the client outsources the administrative burden, market research, and negotiation, allowing them to focus on strategic decision-making. The broker becomes the conductor who coordinates each phase, from the profile analysis to the signing at the notary, ensuring the process is more efficient, faster, and less prone to errors.³⁹

6.2 A 360° Accompaniment: From the Search to the Signature

The service of an expert mortgage broker like AvalTeca is comprehensive and transparent. The support goes far beyond simply finding financing:

Financial optimization: A broker can secure a mortgage with a much more competitive NIR. To provide a clear overview, an example table is presented with some of the best offers available in the market as of August 2025.⁵⁵ It is important to note that these are commercial offers and a broker can obtain personalized and, in many cases, more advantageous conditions.

Type of Mortgage	NIR (Nominal Interest Rate)	APR (Annual Percentage Rate)	Term (Years)	Bank
Fixed Mortgage	2.15%	3.10%	25	Ibercaja ⁵⁶
Variable Mortgage	e+0.49%	3.01%	30	Kutxabank ⁵⁶
Mixed Mortgage (5 years)	1.55%	3.17%	25	Ibercaja ⁵⁶
Fixed Mortgage (Alternative)	2.30%	2.34%	25	Caixabank ⁵⁵
Variable Mortgage (Alternative)	e+0.50%	3.29%	30	Cajamar ⁵⁶

Security and transparency: The professionalism of a broker registered with the Bank of Spain ensures that the search is conducted with complete objectivity and transparency.³⁹ Furthermore, the broker conducts a thorough study of the transaction’s feasibility and the property’s status, including a review of the deposit agreements (arras) and the registry, cadastral, and urban planning situation, thereby protecting the buyer’s interests from start to finish.³⁹
Legal and tax advice: When purchasing a property, especially for foreigners, complex legal and tax questions arise. A comprehensive broker can advise on the implications of ITP or VAT, available tax breaks, and the necessary documentation, avoiding costly mistakes.⁵⁸

7. Conclusion: Your Perfect Mortgage Awaits You in Mallorca with AvalTeca

The real estate market in Mallorca is a dynamic ecosystem, and in 2025, it has established itself as a prime investment opportunity and a top-tier residential destination. However, its complexity, especially for foreign buyers and investors, underscores the need for an expert ally.

In this context, AvalTeca differentiates itself by offering a comprehensive service that goes beyond simple intermediation. Acting as a complete mortgage project manager, the broker not only navigates bureaucracy on behalf of the client but also optimizes financing conditions, mitigates risks, and ensures transparency at every stage. This approach not only results in substantial savings of time and money but also provides the peace of mind of knowing that the investment is in the hands of professionals who understand the specifics of the Balearic market and are committed to their clients’ success.

Leave behind the complexity and stress of an unfamiliar mortgage process. If your dream is a life in Mallorca or you are looking for a smart investment on the island, your first stop is with an expert who understands your needs. Contact us today for a no-obligation mortgage feasibility study. Your perfect mortgage is just a click away.