Should You Buy a House on Mallorca?

2 June 2021

If I were asked to name the chief benefit of a house, I should say, the house shelters daydreaming, the house protects the dreamer, the house allows one to dream in peace? - Gaston Bachelard

A common question that we hear most often from people who want to live on the island but can't decide which is best, "Should I rent or buy?" Some residents on the island often spend months, if not years, trying to figure out the answer. Below are a list of questions that may help you determine which is better for you.

Valdemosa Old Town

Are You Ready to Settle Down? #

The first sign that you’re in the right mindset to become a homeowner is that you’re ready to stay put -- at least for a little while. With COVID, this is a slightly easier decision since traveling is more restricted. These days, most people are longing for places to walk outside, have more space to have a few herb plants and good internet. Everyone seems to agree that being in the heart of a city is not appealing under lockdown.

The strongest answer to this question is that you are longing to put down roots. This comes if you are ready to start a family, buy a dog or have committed to a contract job position. Financially, the calculation you need to make is that you are planning to stay put for at least the next five to seven years. If settling on the island for the first time, you will need to either have a long-term lease in order to complete your legal residency or you will need to purchase a home. That is so much easier said than done. More on that later.

When you sit down to think about purchasing a property, you’ll want to use your time frame as your #1 reference point.

Ask yourself the following questions:

  • Can you see yourself staying at your job for that long or will you be looking for new opportunities?
  • Do you like the area you’re living in would you like to explore other options?
  • Are you planning on moving in with a significant other or expanding your family?

If these questions make you squirmy, the idea of looking five years into the future still feels a little too far ahead for you to grasp, or you still want to see where life life takes you, you may want to consider renting for a bit longer.

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Do You Want to Build Equity for Your Financial Future? #

Let’s face it, becoming a homeowner is expensive. Not only is there a monthly mortgage payment to consider but prospective homebuyers need to be prepared to come up with a sizable down payment, shoulder a portion of the closing costs and be in a financial position to maintain the property. In some ways, this can be considered a built-in savings account. If you pay a reasonable price in an area that will only appreciate, this may be the easiest way to buy a nest egg for financial stability.

Luckily, there is a way that you can prepare for the added financial pressure before the big day comes and understand how much house you can afford. Use a mortgage calculator to estimate your monthly payment. These calculators include estimated taxes and insurance. They do not normally include maintenance.

Start by working towards a down payment that could be worth 20-35% of a home’s sale price plus at least 5% for other expenses. Maintenance is a whole discussion in itself so we will not tackle that here. But consider the age of the property, the makes and models of the equipment in and outside the home including an alarm system to help with the problem of squatters on Mallorca, and cost of insurance to ensure that you are fully covered in the event of unexpected accidents like a flood or wind damage. Knowing how to handle all these issues allows you to protect your financial future.

One big issue to consider: Purchase costs can seem high. Take a look here to learn more >> The Cost of Buying and Owning Property in Spain

Palma Courtyard Home

Are You Ready for Added Responsibility? #

Once you purchase a home, the real fun begins. Yes, owning a home means that you have a lot more freedom to improve the property as you see fit, whether that means putting in an entirely new kitchen, refinishing the hardwood floors or retiling the bathroom.

However, in addition to the creative freedom and ability to really set your mark on your home, you'll have an added layer of responsibility. As the homeowner, you’re the one who is responsible for any necessary maintenance and upkeep on the property. Think about what you’re like as a tenant now.

Are you willing to roll up your sleeves and help with small tasks or are you relieved to know that you have someone to call? If you’re less handy, you may want to take some time to familiarize yourself with common home maintenance tasks before committing to buying anything. It always helps to have a fair idea of what you’re getting into. Usually, the added value you are creating in your financial balance sheet will outweigh the burden of the responsibility.

Repair prep home for winter

Do You Know What You Want? #

Though it may sound self-explanatory, when you’re trying to determine whether or not you are ready to buy a home, it’s useful to have an idea of what you’re looking for. You don’t have to know every single detail. In fact, it’s preferable if you leave some room to flexibility in your home search. That said, though, having a basic set of parameters in mind will make the home buying process go much easier.

You will want to think about the most important factors that you absolutely want to have in your home. These will be the characteristics and layout that give you a sense of comfort, safety and security. This may include details like your preferred location, an ideal number of bedrooms and bathrooms, a target sale price, or any specific must-have features like that perfect picture window view. If you need parking, make sure you look in an area that has ample parking if most of the properties rely on street parking, like in El Terreno.

If you have a strong idea of your must-haves then you may just be ready to take the plunge into home ownership. If not, there’s no shame in the game waiting. In the next few years, Mallorca will have plenty of lower and mid-priced properties for sale. Wading through the endless pages of online listing services can be tedious and produce a brain fog that takes weeks to recover.

Much easier is to look at your needs and determine that number of bedrooms, minimum number of bathrooms, pool, terrace or patio, parking then what is the range of your budget. Then, set the values on the listing sites so you don't wade through pages of repeated listings that have the same property with different photos advertised by multiple agents. That is common with online listing sites and can be crazy making.

Interior house Santa Maria

Which Part of the Island To Settle? #

If settling on the island for the first time, most people don't realize that this island is like its own country instead of the big island in a chain of islands in the Mediterranean. The roads are well maintained and much easier to drive but getting from one side of the island to the other can take over an hour. If you choose to live in the east but your children attend schools in the southwest, that drive can get old after a week.

While Palma is the main city on the island, several towns have full services. We recommend looking at our village profiles to find the area that speaks to you. Most of the villages have Facebook pages where you can find residents and learn more about the area. After your individual case is assessed and where you will be driving to, what services you need easy access to and what you want to have in your village, you'll be better able to search online for a property.

Taking day trips to get a feel for the places is super important and fun! With COVID, many stores have shuttered for the season or are out of business. But most villages and towns on the island will return to full capacity within the next two to three years. Just find the place you like and then begin house hunting.

Portocolom

One Last Point #

To obtain Residency, you will need to either have a long-term lease or you will need to purchase a home. This decision is so much easier said than done. However, if you decide to stay on the island longer than 90 days at a time or 180+ days a year, you must have Residency. And if you decide to rent, you will need to:

  1. Have a lease in the name of the owner registered at the Ayuntamiento (Town Hall).
  2. The lease you sign must be in your legal name that adheres to the one on your legal documents. A company taking out a lease will not be compliant for Residency.
  3. You will then need to register at the Ayuntamiento as a legal resident of the town or village.
  4. You will need to have a formed stamped and signed by the local police showing you are registered.

Conclusion #

There is absolutely no right or wrong answer on renting or buying, except for you. The expat community is welcoming regardless of whether you are here for a fortnight or for forty years. People come and go but once you fall in love with this place, it will live in your heart. The best is to find a village, make long-term friends and know that this is a haven from the hectic pace of metropolitan living yet we have all the modern conveniences. Whatever your decision, stay in touch and share your story. We love hearing them!

2 June, 2021

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