A property in a good location in Mallorca is one of the most stable investments in Europe. Even the real estate crisis in Spain, which in 2009 resulted in a dramatic price decline in many holiday destinations, could not harm the jewel of the Mediterranean.
Breathtaking ocean view to Puerto Soller. Not only this panorama contributes to the stable real estate situation in Majorca as one of the most value resistant real estate markets in Europe.
In the last three years there was a minimal price decline of a maximum of 5-10%, says Stephan Hoffmann. As the Listing Manager of Porta Mallorquina he administrates currently more than 1,800 properties in Mallorca. The slight decline should be seen as a natural market correction since after the new millennium, the real estate prices were ascending yearly in double digits untill 2008.
„The price level has stabilized“,
notes Stephan Hoffmann. Especially villas in front sea line and well maintained country homes, fincas, are still popular. With respect to those properties, the market expert could not observe any price declination.
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2012 is ideal for buying a property
Inflation concerns and euro crisis make global investors escape to familiar values. Gold is currently more expensive than ever and offers no return on capital. The alternative investment of persistant value is the so called by germans “concrete gold”, investing in real estate. In the past, the Germans were eager to purchase a classic family home, but nowadays they have already discovered other European countries for themselves. Mallorca is among the most popular locations for a holiday home.
In 2012, the Spanish government tries to attract buyers with numerous tax reductions, such as halving of VAT (IVA) and 50% less income tax at a future resale – regardless of when the sale takes place.
Advantages of external financing
Your own property in Mallorca’ is an interesting investment
Who fears long-term capital commitment when buying property, should look into external financing which is currently interesting. Indicator of external financing is the “EURIBOR”, the rate of interest on which the European banks borrow money to each other. Since 2008, this rate dropped continuously – sometimes in free fall. As an example, the rate of the 3-month Euribor of 4.6% in 2008, fell down to around 0.65% in late June 2012. The interest offers of the banks are accordingly interesting for their customers.
If you want to have your holiday home financed in Mallorca, should observe a few rules!
Loans by Spanish banks
Noone must have any more fear of language barriers today. Most major Spanish banks in Mallorca have English-speaking staff in their mortgage departments. Some institutes also work together with German and English partner banks, or work like the Uni Credit Group (HypoVereinsbank in Germany) in whole Europe.
Though currently attractive interest rates lure with offers for short-term financing, in Spain they barely know the traditional longterm annuity credits with a fixed interest rate and repayment schedule. Here, the daily updated Euribor rate reigns, after the conditions being variably defined yearly. Since the interest rates, according to the experts, will not decline significantly any further, this is an interesting option for short term solutions, but for long term, however, a risky affair.
As an established provider of real estate, we know the local financing options and are happy to advise you. Even when putting together the necessary documentation we will be there to assist. As Spanish banks finance by notarial agreement, this issue should be resolved before securitization, otherwise the bank terms could change to your detriment.
If you want to register the purchased property as a security, it is important to know that banks do not finance the securitized value but on the basis of an estimate. Your Porta Mallorquina Brokers would be delighted to suggest to you a reliable expert who will create a certificate valid for banks.
Security interest over BHW financing
BHW finance expert Herbert Frey
BHW finance expert Herbert Frey answeres your questions about the financing of real estate abroad
A financing offer with a fixed-rate, however, offers the BHW Bank:
“We are currently the only German bank that offers foreign financing at fixed terms”
Herbert Frey reportes proudly, he is the financing specialist of BHW Bausparkasse (building society) Munich. Rightly so, because the credit model has proven successful in practice.
The credit expert explains the conditions:
“The loan agreement will be coupled with a building saving agreement: for example, after 10 years of the running, the savings agreement resolves the left over morgage with a guaranteed interest rate.”
The guaranteed rate of the saving agreement is currently at 2.75% and will apply until the final repayment of the loan. The borrower thus have a 100-percent security of interest over the entire term. Another advantage is that after the end of the fixed interest, any unscheduled repayments at any height are possible. Condition for this financial product, however, is that the borrower either owns property in the UK, or receives from a fixed income or pension from the UK.
Have you got any questions about the real estate financing in Mallorca?
Simply comment on our blog and our expert will respond.