Unencumbered, or nearly so
The lower the existing charge, the greater the room. A property with a high remaining balance can't carry the chain — the 50% refers to market value, not to what's still unencumbered.
Info · Balearics · Financing structure
Remortgage Property Balearics: you already own the equity
Most banks in Spain only finance a purchase. Anyone who wants to mortgage an already-paid property to acquire the next one hears almost everywhere, as a non-resident: can't be done. Almost everywhere.
Can I, as a non-resident, mortgage my paid-off property on the Balearics to buy the next one?
Yes — but only with the few banks that underwrite this at all for non-residents. Most Spanish banks finance purchases exclusively; anyone who wants to mortgage an already-paid, unencumbered property to raise capital for the next one hears "can't be done" almost everywhere. Almost everywhere. Where it works: the loan-to-value sits around 50% of the tasación, and the existing property must be unencumbered — that's the entry requirement, not a rate to negotiate. The released capital must demonstrably flow into the next property in Spain; the funds may not leave the country. Your existing asset becomes equity without you having to sell it. Important and honest: this is a niche product with narrow conditions, not a standard offering — and that's exactly why bank selection is what decides the outcome. We check per case which lender underwrites this kind of mortgage against existing Balearic property.
Equity release: the chain
The idea is simple; the execution isn't. You own a property on Mallorca, Ibiza or Menorca — paid off, or largely free of debt. That property isn't dead capital. It's security.
- Mortgage the existing property. A mortgage is registered against the existing property — in the order of up to about 50% of the market value.
- The proceeds become equity. The released capital serves as the equity contribution for the next purchase.
- Finance the next property. The new property is in turn mortgaged — also in the order of around 50%.
The result: the portfolio grows without fresh capital having to flow in from outside. No sale, no liquidating investments, no capital transfer from Germany.
This typically becomes relevant from a financing volume of around half a million euros — below that, the effort rarely pays off for anyone involved.
Why this almost never works
The Spanish mortgage market is built around acquisition. The classic hipoteca finances a purchase transaction: there's a purchase contract, a purchase price, a valuation, a payout to the seller. Everything is tailored to that one sequence.
A mortgage without a purchase transaction — releasing capital against a property you already own — doesn't fit that mould. For residents, it's already the exception. For non-residents, most institutions decline it outright: the use of funds is harder to trace, the anti-money-laundering checks are more involved, and it simply isn't the branch's business model anyway.
That's why you'll usually get a no on this question — not because it's impossible, but because the counter you happen to be standing at doesn't do it.
There are lenders that do it. Few. Which ones, what valuation standards they apply, and how an application needs to be structured so it doesn't fail in the first round — that's our work, and that's why it isn't listed on this page. It comes at the end of a conversation.
What your existing property needs to bring
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The Balearics have the advantage here: a liquid market, solid comparables, international demand. A bank that would have to sell the security in a default scenario finds buyers here. In thinner markets, that's exactly where it falls apart.
Two loans, not one
At the end of the chain you're servicing two financings. The affordability calculation has to hold up for both — including for a period when one of the properties isn't rented out.
Source and use of funds
With capital release, the bank looks more closely than with an ordinary purchase. What the money is used for must be cleanly documented — a planned second purchase is a good, traceable one — but what matters is that the use takes place in Spain.
What we won't hide from you
This structure is leverage. Leverage works in both directions, and anyone who doesn't tell you that is selling you something.
- Concentration risk. In the end, two properties sit in the same market — and both are encumbered. If price levels fall on the Balearics, they fall under both at once.
- Both properties are security. After the mortgage, the existing property is no longer the debt-free backbone it was before. You're deliberately giving up that security.
- Interest-rate risk. With a variable rate, a Euríbor move affects both loans simultaneously.
- It isn't a commitment. Whether your case is workable is decided by the property, the valuation and your creditworthiness — not by a website. The figures given here are orientation, not a guaranteed condition.
If these points don't put you off but raise questions instead: that's exactly what we should talk about.
The case this structure is made for
When the wealth sits in the house and the next generation needs it
The typical Mallorca constellation looks like this: the villa has been paid off for years, the owner is over seventy, and the child is facing a plan of their own. Nobody wants to sell. Two things still make the case workable.
First, the term. The loan normally has to be repaid by the borrower's 75th birthday — but where there are two borrowers, the age of the younger one counts. If the child co-signs, the term follows their age; their own qualifying income is not required. An arithmetically impossible instalment becomes a workable one.
Second, the use of funds. It is tied to Spain, not to a particular purpose. The capital must be used in Spain and evidenced to the bank — the funds may not leave the country. Within that limit more is possible than most assume: buying a further property, but equally a gift to the child, as long as the money stays in Spain. Anyone wanting to fund a project in Germany falls outside the structure — not because of the purpose, but because of the location.
The tax side of a gift — Spanish gift tax, Balearic allowances, valuation — belongs with your tax adviser. We tell you whether the financing works and what the bank measures it against. In full, with the German side and other regions: Inheritance and Gift Tax on the Spain Property.
Balearics · tax position
Why a gift in Mallorca costs less than most people assume
The Balearic Islands have effectively abolished inheritance and gift tax for direct family in two steps — and the second step is recent. Older sources therefore still quote figures that no longer apply.
| Transfer | Groups I and II | Since |
|---|---|---|
| Inheritance | 100 % relief on the tax due, no upper limit | 18 July 2023, Decreto Ley 4/2023, confirmed by Ley 11/2023 |
| Lifetime gift | 100 % deduction — previously around 7 % in effect | 25 July 2025, Ley 6/2025 of 23 July 2025 |
| Group III (siblings, nephews) | 60 % or 35 % | Ley 6/2025 |
Groups I and II are descendants, spouses and ascendants — exactly the parent-and-child constellation. For inheritances the relief expressly extends to non-residents, corrected by Ley 11/2023 following a CJEU ruling. For gifts we did not find an equally explicit clarification — have your tax adviser confirm that point for your case.
What has to be in place:
- The gift is executed as a notarial deed. Without an escritura pública the deduction does not apply.
- For real estate, the value stated in the deed may not exceed the cadastral reference value by more than 20 %.
- For cash gifts the deed must state the origin of the funds, and that origin must be evidenced.
- Modelo 651 must be filed even where the tax is zero. Failing to declare forfeits the deduction.
The third point fits this structure particularly well: "lending against our own, fully paid property" is a clean, documentable origin — land register, loan agreement, disbursement. Exactly the kind of evidence a deed can carry.
As at July 2026. Regional tax law changes; this overview is not tax advice. The calculation in your case — allowances, pre-existing wealth, valuation — belongs with your tax adviser. We tell you whether the financing works.
Frequently asked questions
My Spanish bank says this can't be done. Is that true?
Probably true for that bank. Most institutions in Spain finance purchase transactions exclusively and decline capital release for non-residents as a matter of policy. That's a statement about the institution, not about the market.
Why only 50% and not 70% like on a purchase?
Because the risk profile is different. On a purchase, there's a purchase price that confirms the value — someone is paying it right now. On mortgaging an existing property, there's only the valuation. The safety margin is correspondingly larger.
Does this also work on the Spanish mainland or in Portugal?
In principle yes, in practice noticeably rarer. The Balearics have the most liquid and internationally sought-after market — and that's exactly what a bank looks at if it would have to sell the security in a default. The thinner the market, the faster the answer is no.
I am over 70. Is the term then too short?
Not necessarily. The loan normally has to be repaid by the borrower's 75th birthday — but where there are two borrowers, the age of the younger one counts. If a child co-signs, the possible term follows their age; their own qualifying income is not required. Five remaining years can become twenty-five, which turns an arithmetically impossible instalment into a workable one. On higher-value properties in Mallorca this is often the point at which a refusal turns into an approval.
Do I have to sell my existing property first?
That's exactly the point: no. The usual route — sell in order to be able to buy — costs transfer tax, agent commission and, quite possibly, the appreciation you'd otherwise have kept. Mortgaging leaves the existing property where it is.
Most banks say no here. Not all of them.
If you hold a property on the Balearics and are thinking about the next one: send us the key figures. We'll tell you whether the chain holds up in your case — before you apply anywhere.
Discuss your caseThe structure isn't limited to the Balearics: mortgaging an existing property anywhere in Spain — including the guide to requesting it.