If you choose a German bank partner, you usually finance the property in Mallorca with oneannuity loan. This means that you agree on a fixed interest rate for a certain period of time, often 10 years. After the fixed interest period, there is a residual debt that you can either redeem or with afollow-up financingcontinue to finance. according to dr Small trend indicator construction financing, more than 70% of real estate financing in Germany is carried out via an annuity loan.

 

The special features of an annuity loan include the following points:

• Stable interest rates

• Long fixed interest rate

• special right of termination

• Familiar loan processing

This allows you to enjoy all the advantages of a German bank for real estate financing in Mallorca. You can find out what conditions you currently get for your loan using our interest rate calculator. 

​

In contrast to German banks, Spanish banks like to grant loans with variable interest rates.

The variable interest rate is based on an average interest rate, the Euro Interbank Offered Rate (EURIBOR for short). It is determined from information from more than 20 European banks. Since it is set every 3 months, it fluctuates. This means that interest rates can rise or fall over the term of the loan.

​

This results in the following disadvantages:

• Little planning security

• Additional costs when interest rates rise

There is also the option of taking out a fixed rate deal with a Spanish bank. This is comparable to the full repayment loan known in Germany. You pay off the entire loan for your house in Mallorca over a fixed period of time, usually up to 20 years. After that, the loan is paid off and there is no remaining debt.

But you have a higher monthly rate than with an annuity loan and therefore a higher financial burden every month.