Buy property in the Canary Islands: real cases from practice with a Spanish mortgage for non-residents
Anonymised examples of how buyers arranged a mortgage and financed their property in the Canary Islands. Applications regularly go back to a mainland desk, and an assessor who does not know the micro-location works from broader, more cautious comparables.
How much do banks lend for a property in the Canary Islands, and what counts as equity?
Banks finance non-residents up to a fixed share of the bank or purchase value depending on country and profile; the remainder plus acquisition costs is equity. The Canary tax regime applies: 6.5 percent transfer tax on resales, and 7 percent IGIC plus 1 percent AJD on new builds. Those costs come from your own funds.
Valuations run conservative when a mainland desk assesses
Applications regularly go back to a mainland desk; an assessor who does not know the micro-location works from broader, more cautious comparables.
New builds: IGIC plus AJD; resale: ITP
On new builds the Canary IGIC replaces the mainland IVA, plus AJD; on resale, standard-rate ITP. Those costs come from your own funds.
How do you finance a move to the Canaries in stages?
Reports from the smaller Canary Islands rarely describe a purchase in one step. First comes the second home, then the centre of life. A home office, more room for the family and step-free living for later years follow. The financing follows in stages, and that shapes the structure more than the property itself does. In practice it means the first loan must not block the later one.
Anyone who takes the lending limit to its maximum straight away has no room left for the second step. Keeping reserves allows a top-up later or a second property. The sequence of steps therefore belongs in the first plan, not in the second. Documented purchase prices range from 625,000 to 1,540,000 euros.
Property financing in the Canary Islands: what do the reports show?
Reports from the smaller Canary Islands show gradual emigration: first a second home, then the main home, combined with working from home, more space for the family and low-barrier living for retirement. This is rarely financed in one go, but rather in stages — which shapes the financing structure more than the property itself. The Canary Islands’ special tax regime applies: 6.5 % ITP on the purchase of second-hand properties; for new-builds, 7 % IGIC plus 1 % AJD.
What is different about financing in the Canary Islands?
For financing purposes the Canaries are not simply a warmer Costa Blanca. Three things are different here, and they decide whether a case is feasible:
- A different tax on purchase. The Canaries apply IGIC instead of the IVA usual on the mainland, so the purchase costs come out differently. As everywhere, they cannot be financed and have to come out of your own funds.
- A thinner banking landscape on the ground. Not every branch of a mainland bank decides on the island — applications regularly travel back to the mainland. That costs time, and it shifts the valuation: an assessor who does not know the micro-location values conservatively.
- Holiday letting is a question of use. Anyone intending to let the property to tourists needs the corresponding licence — and the bank will ask about it. A financing built on rental income from unlicensed letting does not hold.
What works regularly on the Canaries and is needed less often on the mainland: the combination of equity from home and Spanish financing. Cushioning the valuation uncertainty with more of your own funds gets you through faster.
Market and rules: the Canary Islands in detailWhy the valuation decides
Frequently asked questions about financing in the Canary Islands
How much can non-residents borrow?
In Spain, banks finance non-residents up to a fixed share of the bank or purchase value depending on country and profile; the remainder plus acquisition costs is equity.
Can I finance my move to the Canary Islands in stages?
This is exactly how most cases on this page play out: first a second home, then a main residence. This has a greater impact on the financing structure than the property itself — the term, unscheduled repayments and the question of which income still counts at the time of the change. The ITP rate for second-hand properties is 6.5 %; for new-builds, the rate is 7 % IGIC plus 1 % AJD.
What do I need to bear in mind regarding financing if I want to use the property in the Canary Islands as a holiday let?
Anyone wishing to let the property to tourists needs the appropriate licence, and the bank asks about it. Financing based on rental income from unauthorised letting is not viable.
What does the consultation cost?
The initial consultation is free and without obligation; on completion you pay 1 % of the loan amount (no VAT) — no bank commission.
Why do Canary valuations come in conservatively so often?
Because not every decision is taken on the island. Applications regularly go back to a mainland desk, and an assessor who does not know the micro-location works from broader, more cautious comparables.
Which tax applies to a new build on the Canaries?
The Canary IGIC takes the place of the IVA usual on the mainland, alongside AJD stamp duty on the deed. On resale property, ITP applies at the standard Canary rate. In every case those costs come out of your own funds — no lender finances them.
What loan-to-value can non-residents obtain?
In Spain, banks lend to non-residents, depending on country and profile, up to a fixed share of the bank valuation or purchase value; the rest plus purchase costs is equity.
A similar situation in Spain or Portugal? Let's talk.
Every financing in Spain and Portugal is an individual case. In a free initial consultation we tell you honestly what is feasible and which bank fits.
Anonymised individual case, not a binding statement for other projects · Siegfried Perini under the licence of Olga Nikushkina · §34i GewO · no tax or legal advice · no financing commitment; conditions depend on creditworthiness, loan-to-value and bank
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Content by Siegfried Perini — local brand representative since 2019, active in real estate since 1992, entered in the German intermediary register (§ 11a GewO) as a person directly involved in brokerage and advice. Point of contact for German-speaking buyers in Spain and Portugal. Brokerage by Olga Nikushkina, mortgage credit intermediary under § 34i German Trade Regulation (GewO); in Portugal through a locally licensed intermediary.