Buy property in Tenerife: real cases from practice with a Spanish mortgage for non-residents
Anonymised examples of how buyers financed their property in Tenerife. Almost every report describes the same transition: the second home becomes the centre of life, which calls for a mortgage that carries twenty years rather than a holiday loan.
How much do banks lend when you buy property in Tenerife as a non-resident?
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. In Spain lending is capped at 70% of the lower of purchase price and valuation, and on the islands the valuation comes in below the agreed price more often than on the mainland.
Does a second home or main residence change the loan?
Yes. For the bank it is the difference between a holiday loan and one that must run twenty years; new builds carry IGIC plus AJD, resales ITP.
- Second home or main residence changes the loan: For the bank it is the difference between a holiday loan and one that must run twenty years. Tax residence is a separate question for a tax adviser.
- New builds: IGIC plus AJD; resale: ITP: On new builds the Canary IGIC replaces the mainland IVA, plus AJD; on resale, standard-rate ITP — lower than the mainland rates. Financing a new build in stages.
- How long does a mortgage on Tenerife need to run? Usually around twenty years — and the term is measured by your age at the final instalment, not at signing. Almost every report from Tenerife describes the same transition.
The second home becomes the centre of life. Retirement after working life, a home office in the sun, an early plan for passing property to the next generation. And repeatedly a decision for the island capital rather than a resort.
Buying that way calls for a mortgage that carries twenty years, not a holiday loan. Which brings the age limit into view. Spanish banks measure the term by the borrower's age at the final instalment, not at signing.
A younger co-borrower can extend the term and reduce the instalment, even without qualifying income of their own, but must go on the title deed with a share of at least 10 percent.
In the Canaries resales carry transfer tax of 6.5 percent and new builds 7 percent IGIC plus 1 percent AJD instead of the mainland rates. Documented purchase prices range from 685,000 to 1,980,000 euros. The remainder above the loan comes from the buyer's own funds.
What does the consultation cost?
The initial consultation is free of charge and without obligation; upon completion, you pay 1 % of the loan amount (excluding IVA) — no bank commission. Our fees.
In the 6 financing deals documented here, the purchase prices ranged from €685,000 to €1,980,000. Each amount is stated in the relevant report and can be found there.
For non-residents, the loan-to-value ratio in Spain is up to 70 % of the lower of the purchase price and the tasación. The remainder, around 30 %, is covered by the buyer’s own funds.
In the Canary Islands, when buying a second-hand property, an ITP of 6.5 % applies; for new-builds, 7 % IGIC plus 1 % AJD (Financing in Tenerife) applies instead of the mainland rates.
How were properties in Tenerife financed?
The following case reports show, in anonymised form, how different situations in Tenerife were financed for non-residents. Creditworthiness, the property and the bank's loan-to-value are always decisive.
Two things make Tenerife different from the mainland, and both change the numbers rather than the process.
Is the tax bill lower than on the mainland?
Yes, but not by as much as people say: on a resale the Canary ITP is 6.5 %, and the claim that the Canaries charge no ITP is wrong.
The claim that the Canaries charge no ITP is simply wrong, and it has cost buyers real money: it understates closing costs by roughly 6.5% of the purchase price. The tax base is the higher of the purchase price and the cadastral reference value, so buying below that reference value does not lower the bill.
Reduced rates of 5%, 4%, 1% or 0% exist, but they attach to a primary residence and to personal circumstances — under 35, large families, disability of 65% or more, protected housing. A non-resident buying a second home pays the standard rate. Treat the reduced rates as the exception they are, not as the normal case.
On a new-build purchase the islands charge IGIC at 7% instead of the mainland IVA of 10%, plus stamp duty (AJD) at 1%. The real saving against the mainland is therefore 0.5 to 3.5 percentage points on a resale (6.5% against 7–10%) and around 3 points on a new build. Worth having — not the tax haven the brochures imply.
The regional detail, including which municipalities carry which rate and how the reference value works, is set out on Tenerife property for sale — regions, costs and financing.
How do valuation, letting licence and the north–south split affect the loan?
The south is premium tourism with firm prices, the north year-round living valued more conservatively; this shows in the tasación, and letting needs a licence check before the offer.
Tenerife divides sharply. The south — Costa Adeje, Los Cristianos, Playa de las Américas, El Médano — is premium tourism with strong letting demand and correspondingly firm prices. The north around Puerto de la Cruz and Santa Cruz is year-round living, cheaper per square metre, and valued more conservatively by lenders because the resale market is thinner.
That difference shows up in the tasación, the bank's own valuation. Lending is capped at 70% of the lower of purchase price and valuation, and on the islands the valuation comes in below the agreed price more often than on the mainland — particularly for older stock and for properties bought in a rising market. Any shortfall is equity you have to find at short notice.
If letting is part of the plan, check the licence position before the offer, not after. Holiday letting on the Canaries requires registration and several municipalities restrict new licences; whether a lender will count rental income at all varies from bank to bank, and most will not count income that depends on a licence you do not yet hold.
Frequently asked questions
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.
What is the difference between a second home and a main residence in Tenerife?
For the bank, it is the difference between a holiday loan and one that has to last twenty years. For you, there is also the issue of tax residency, which is not covered by this advice. In the Canary Islands, the ITP rate is 6.5 % on second-hand properties, while for new-builds the IGIC rate is 7 % instead of the 10 % IVA — lower than the rates on the mainland.
How can a younger co-borrower extend the term of a loan in Tenerife?
A younger co-borrower can extend the term and reduce the instalments, even without any eligible income of their own. To do so, they must be registered in the land register with a share of at least 10 %. The term is calculated based on the borrower’s age at the time of the final instalment, not at the time of signing.
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.
What transfer tax and IGIC do I pay when I buy property in Tenerife?
On a resale purchase the Canary Islands charge transfer tax (ITP) at a standard rate of 6.5%. On a new-build purchase the islands charge IGIC at 7% instead of the mainland IVA of 10%, plus stamp duty (AJD) at 1%.
A similar situation in Spain? Let's talk.
Every financing in Spain is an individual case. In a free initial consultation we will tell you honestly what is feasible and which bank fits.
Anonymised individual case, not a binding statement for other projects · Siegfried Perini for the owner 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.