The Guru Guide To Opening A Gran Canaria Business

The Gran Canaria guru guide to opening a Gran Canaria business

Opening a Gran Canaria business: Self-employed or a limited company?

If you’re planning to open a Gran Canaria business, the first thing you need to do (after a market study and lots of research) is to work out what type of company or self-employed status is best.

There are dozens of different company structures allowed in Spain but most people opt for the most common ones. Just for fun, here’s a full, slightly mind-boggling list of the potential options.

Being a sole trader in Gran Canaria: Going autónomo

Most small Gran Canaria companies keep things simple and opt for self-employed status (known as being Autónomo). This allows you to work legally, open a business bank account, send facturas in your name, employ other people, etc.

When we said simple, notice how we didn’t mention cheap. Once your first year of cheap Autonomo status is up, you’re looking at a mandatory 250-270 euro payment per month. This covers social security payments and insurance but doesn’t include tax. Autonomos in Gran Canaria still have to pay income tax (IRPF) and VAT (IGIC).

The total tax bite for a sole-trader in Gran Canaria is roughly 20% of earnings (but you can deduct expenses). You have to do annual or quarterly IRPF declarations and pay IGIC quarterly (we seriously recommend that you employ and accountant or gestoria to do this for you).

Two or more autonomos can further organise themselves into a partnership and obtain a CIF business number which looks better on bids that the NIE o NIF number that autonomos have to use.

A major disadvantage of being autonomo is that there is no limitation so creditors can pursue all your assets including your home if you are in debt. There is a form of autonomo called a Emprendedor de Responsabilidad Limitada which protects your home (to a certain extent) from creditors.

In any case, civil liability insurance is a good idea.

A limited company in Gran Canaria: The sociedad limitada or SL)

Sociedad de Responsabilidad Limitada (almost always referred to as an SL) is the Spanish equivalent of a UK limited company and give you similar protection from creditors in the case of debts.

To set one up you need to register a name with the Registro Mercantil and to put in a minimum capital investment of €3,005.06 (most people take it out the day after the company is set up although you aren’t meant to).

Starting a stock corporation in Gran Canaria: The Sociedad Anónima – S.A.

This is not a common way to start a business in Gran Canaria or Spain as it requires an initial capital of €60,101.21. However, an SA does protect you from personal liability and also allows you to sell the shares to a third party.

If your Gran Canaria startup is going global, this is a good ay to get investors on board.

An SA must have a Board of Directors (Consejo de Administración) and hold an annual Shareholders’ General Meeting (Junta General de Accionistas).

The tax efficient Gran Canaria company: Starting a ZEC

If you plan to come to Gran Canaria, invest a significant amount of money (100K-plus) and employ five people, then consider a ZEC entity. These are legal, low-tax companies based in the Canary Islands that save serious amounts on capital gains and corporation tax.

Read our guide to starting a Gran Canaria ZEC here.

Joining a cooperative in Gran Canaria: Joining a Cooperativa

Cooperatives are a way for autonomos to share costs. Instead of working for n employer as an autonomo, you bill via the cooperative and pay it a percentage of your earnings.

To join a cooperative ou have to find one that works in your business niche (teacher, jeweler, etc). Then you have to persuade the people you work for that cooperatives are a valid way of doing business in Gran Canaria as most people have never heard of them.

Cooperatives are worthwhile provided that you own under around 2000 euros per month. Above this figure and you are better off being autonomo.

Opening a Gran Canaria business

Becoming autonomo isn’t too hard: Just take your NIE to the Ventanilla Unica Empresarial on Leon y Castillo in Las Palmas and hope that everyone is at their desks. You should be able to sign up for tax and social security on site, then register for IGIC with the Canarian tax office (about 10 minutes north of the VUE).

If you are a new resident, you may be asked to provide evidence that you have a business plan and clients before you can sign up.

You need to pick an autonomo code that identifies your line of work. The list is long and rather pedantic so it’s worth having a look before you head off to sign up. Here is the full list in English. The only effect this has on you is that it affects whether you have to declare your earnings annually or quarterly.

You should be able to sign up for tax and social security on site, then register for IGIC with the Canarian tax office (about 10 minutes north of the VUE).

For all other corporate structures in Gran Canaria, we seriously advise you to use an advisor as the paperwork is complex and the options myriad.

In Las Palmas de Gran Canaria, we recommend Montelongo Asesores as they have plenty of experience helping foreigners to set up in Gran Canaria. If you are planning a ZEC, they are the most experienced firm on the island.

If you plan to run a business in Gran Canaria you’ll need to speak at least some Spanish: Here’s our Guru Guide to Learning Spanish in Gran Canaria.


Got A Gran Canaria Mortgage? Your Bank Probably Owes You Thousands

Spains banks owe many Gran Canaria customers thousands of euros

Spains banks owe many Gran Canaria customers thousands of euros

The last decade was torrid for Spain’s banks. They overlent and overspent during the property boom and suffered during the subsequent crash. Many went bust or merged. Read More


The Guru Guide To Getting Your Certificado Digital In Gran Canaria

The Guru guide to getting your Certificado Digital in Gran Canaria

The Certificado Digital is a way of getting lots of useful bits of paper out of the Spanish tax and Social Security systems without having to queue up for them.

As you might expect, getting it is a whole heap of hassle. However, it’s well worth getting because it saves you lots of even bigger heaps of hassle down the line.

The process is a two-day job.

On day one, you have to submit a form and get a code via email. On day two, you take the code to Hacienda, then go back to your computer and download the certificate. Read More


The Guru Guide To Making A Spanish Will In Gran Canaria

Why you must make a will in Gran Canaria and how to go about it
Dying as a foreign resident in Spain without a valid will is a wildly inconsiderate thing to do as it leaves your family and inheritors mired in bureaucracy at the worst possible time. 
Spanish inheritance law is spectacularly illiberal and controls exactly who you can leave your assets to when you pop your flip flops.

Here’s how it works …

When you die, your assets are divided into thirds.

  • One-third goes to the kids. Each one gets an equal share.
  • Another third also goes to the children, but you get to decide how much you leave to each one. However, a surviving spouse gets dibs on this third while they are alive.
  • The last third of your assets is yours to give away as you please.
  • If parents survive their children, the resulting pie chart of shares is incomprehensible.

If your assets consist of cash and shares, it’s easy enough to divvy them up. However, as most people in Spain invest in property, dying almost always causes problems.

For example, what if granny won’t move out of a big house even if the grandkids want to go to university and their parents can’t afford it? And does anyone have the contact detail for that long-lost brother in Venezuela?

Fortunately, foreign residents can avoid the whole issue.

The benefits of dying as a foreigner in Spain

The Ley de Herederos Forzosos applies to Spanish nationals and foreign residents. However, guiris can avoid it by making a Spanish will that specifies that they want their estate to be governed by their home country’s rules.

This is why it’s now essential to make a will if you are resident in Spain and don’t want the Spanish state to decide what you can do with two-thirds of your estate.

NOTE: The law changed in 2015 so you now have to specify that you want your home country’s rules to apply to your estate. Prior to 2015, it was automatic.

Source article (in Spanish).

A Spanish will is essential for most Gran Canaria residents

If you’re here as a teacher, rent a flat and spend all your spare money on rum, you don’t need a will. But as soon as you buy a property, get married or breed, you do.

Buy you can’t just scribble down a few instructions and then forget about it; Spanish will-making is as complex as you’d expect.

To start with, there are three types of will.

The three types of Spanish will

  • Testamento abierto: An open will and the most common type. It must be drawn up by a lawyer or notary, witnessed, and a copy registered with the central repository of wills in Madrid.
  • Testamento cerrado: A secret will that is registered by a notary but remains sealed. This kind of will is popular with pirates and vindictive pensioners.
  • Testamento ólografo: A verbal or handwritten will. Verbal wills must be witnessed by at least five people (only three during an epidemic) who then have to tell a notary what you said after you die (and agree with each other). A handwritten will is much simpler as it doesn’t need witnesses or a notary. Once you die, however, a handwritten will has to be verified and this can take time.

Make a will in Gran Canaria: Just go to a lawyer or notary

As you may have gathered, it’s best to get decent advice before you die and blight your family’s life for a generation. The easiest way is to go to a Spanish lawyer in Spain (one who speaks your language) and get them to draw up a testamento abierto or testamento ólografo (which you need to write out by hand; isn’t this fun).

A basic open will doesn’t cost more than 50 euros to get signed, stamped and registered at a notary in Gran Canaria.

Tips on dying neatly in Spain

Consider funeral insurance, which means that someone else deals with the paperwork and haggles with predatory funeral providers on your family’s behalf.

Have a separate will if you own property or assets outside Spain. For example, if you own a British property, it’s best to have a British will that covers it.

Don’t nominate an executor in your Spanish will unless you are advised to by a lawyer. In many cases it confuses things and makes the whole process far more expensive.

Inheritance tax in Gran Canaria

Here’s some good news; the direct families of most Gran Canaria residents and even non-resident property owners  in the Canary Islands get a rebate of 99.9% of the inheritance tax due. This applies to EU and EEA citizens (and Brits for now). See this detailed article for more details.

This exemption became law in 2016 for two reasons…

Other areas of Spain offered the rebate and lots of Spanish people and wily foreigners were moving their money to more generous autonomias to avoid paying inheritance tax.

Inheritance tax in Spain must be paid before the assets are released and many people simply couldn’t afford to inherit.

So, in summary, you will make a will in Gran Canaria, won’t you? Yes, you WILL!

Read More


The Guru Guide To Gran Canaria Driving Licences

Everything you need to know about the Gran Canaria driving licence renewal and swapping

Everything you need to know about the process of renewing  or swapping a Gran Canaria driving licence

Renewing a Spanish driving licence in Gran Canaria is now a simple procedure. All you need is to pass a few simple medical tests.

You don’t even have to visit Las Palmas or go to Tráfico as the whole process is handled by the medical centres that do the tests. Most aren’t that busy and you can walk in and get it done on the spot.

Where are the medical centres?

There’s at least one medical centre doing the tests in every big town on the island

There’s a full list of recognised medical centres on Tráfico’s website, but it covers the whole of Spain and is  485 pages long. Tráfico also has a printed list at the information desk.

Just Google it!

What do I need to take?

Your old driving licence, passport and residencia paper. You don’t need a photo as the medical centre takes it for you (check this with the centre in advance).

What’s in the medical test?

Nothing too strenuous: To pass, you have to answer a few questions about your health and lifestyle, then play a computer game a for a couple of minutes. Don’t worry if you get a lot of beeps during the game as almost everyone passes.

Then, you do a hearing and simple sight test, answer more questions and have your blood pressure measured.

That’s it. The medical centre then submits the application for a new licence for you.

Do I get my new licence straight away?

No, you get an A4 piece of paper that is valid for three months (but isn’t valid outside Spain). Your licence is sent by post and should arrive in less than six weeks. It’s worth making sure that the address that Tráfico has on file is the right one (ask at the medical centre).

If your new licence hasn’t arrived within three months, go to tráfico and tell them.

How long is the new licence valid for?

A new Spanish standard driving licence (Clase B) is valid for 10 years provided that you are under 65.

For over-65s, your licence is valid for five years.

How much does it cost to renew a Gran Canaria driving licence?

The medical test costs €35-60 euros depending on the medical centre. The ones right by Tráfico in Las Palmas seem to be the most expensive.

You also have to pay €23.50 to tráfico for your licence but the medical centre handles the payment so you don’t have to go to a bank.

Can I renew a Spanish licence that has run out?

Yes.  You can just go to a medical centre and get it renewed.

Do I need to change to a Spanish licence?

European law changed in 2013 and all foreign residents (EU; EEA) in Spain now have to change to a Spanish licence once their national licence runs out. If you have a national licence that is valid for more than 15 years or valid indefinitely, you have to change it for a Spanish licence within two years of becoming resident in Spain.

NOTE: There’s been a lot of confusion about this rule, with Tráfico saying one thing and police another.

However, Tráfico is now telling all EU and EEA residents that they have to get a Spanish licence once their national one runs out, or within two years of becoming resident if their national licence is valid for more than 15 years.

Any Brits wondering how Brexit affects their British licence won’t get much sympathy from Tráfico. Their advice was to change licences now just in case Britain leaves the EU completely.

How do I change to a Spanish licence?

The procedure takes two trips to Tráfico. On the first visit, you hand in all your paperwork. Tráfico then checks your licence with your home government. Then it sends you a letter and you go back to hand over your licence. You get a temporary licence and your Spanish licence arrives by post within six weeks (if you’re lucky).

Allow at least six months for the entire procedure.

To start the ball rolling you need the following…

An appointment booked on the Tráfico website here: You can’t just rock up and do it on the spot. Make sure you apply for a cita previa for “canjes de permisos de conducción europeos”.

  • This form, filled in
  • Your NIF or NIE (original and photocopy)
  • Your passport (original and photocopy)
  • Your current licence: It needs to be valid (original and photocopy)
  • A 32 x 26 mm photo showing your face (no sunglasses, hats, etc)
  • One more piece of paper that you don’t have. This one is compulsory.

The procedure costs €27.70 and you can pay by card in Tráfico (it no longer accepts cash for any procedure or fine payment).

See this English Tráfico form for more details.

Over 65s may need a medical test to change over to a Spanish licence.

Non-EU citizens

For non-EU and EEA citizens of countries with recognised licences, see this informative form.

Citizens of Japan, Republic of Korea, Switzerland, Monaco and Andorra, see this form. You need to do the health tests to swap your licence for a Spanish one.

Citizens of other countries, see this form, then go to Tráfico and ask.


Gran Canaria Complaint? There’s A Form For That

The hoja de reclamaciones or official complaints form in Gran Canaria

 

When Naomi Campbell came to Gran Canaria in 1997 she complained a lot, then tried (allegedly) to commit suicide. 

Now, there’s nothing worse than a Guiri that grumbles all day long, but sometimes you do need to kick up a fuss. Perhaps somebody should have told Naomi about the right way to complain in Spain.

Spain’s official complaints form is called the Hoja de Reclamaciones and all public-facing businesses in Gran Canaria have to have it (and a sign proving that they have it).

Used right, the Hoja de Reclamaciones is a powerful tool for forcing a dodgy restaurant or hire car company to treat you right.

Make A Gran Canaria Complaint: The Hoja de Reclamaciones

In most cases, just asking for it is enough to solve the problem. Filling it in is time-consuming and can lead to an inspection visit from the local OMIC oficina de consumo. Businesses don’t like inspections because they check everything and can levy fines.

If you actually want to fill in the Hoja de Reclamaciones, it comes in triplicate (of course). You keep the green copy and the business keeps the pink copy. To register your complaint you have to post the white copy to the nearest Oficina del Consumidor. Include photocopies of any paperwork and any photos that back up your claim.

While you can fill in the form in English, it will delay the process. It’s best to do it in Spanish if you can.

If a business refuses to give you the Hoja de Reclamaciones, you can call the local police, or report them directly to the local oficina de consumo.

List of Gran Canaria Oficinas del Consumidor. Choose the one in the Municipio where the business is located. The Las Palmas one even has a Facebook page.


The Zen Art Of Surviving Gran Canaria Bureaucracy

The zen art of surviving Gran Canaria bureaucracy

The zen art of surviving Gran Canaria bureaucracy

This article contains the secret to effortless paperwork in Gran Canaria. A secret that guarantees that you’ll never sit for hours in the wrong queue for a paper you don’t need. 

Then we’ll tell you where the toothless 15th Century pirate Pedro Cabrón buried his treasure.

No, we won’t. We’re only Gurus, not gods.

All we can do is help with the creeping darkness that consumes your soul when you deal with Gran Canaria’s bureaucracy.

As for El Cabrón’s treasure, legend has it that it’s buried somewhere on the east coast of Gran Canaria. Find his false teeth and you get the booty.

Know your adversary

The Spanish civil service is a sprawling conglomerate created by committee and run by middle management. The boss is on holiday and the one person who knows how it works is on Maternity leave. Forever.

The Canarian Government is a franchise that lost the rule book but carried on regardless.

Your local ayuntamiento is a lemonade stand run by aliens.

Tráfico is an out-of-control ATM that only works in reverse.

Hacienda is a bigger ATM. With a gun.

Before you give up and move to Norway, remember that nobody ever died while queueing for a form. Government offices in Gran Canaria don’t open for long enough for that.

Inefficient but not corrupt, unless you’re rich

Saying that Gran Canaria bureaucracy is inefficient is unfair to the hard-working funcionarios who dedicate their  days to making problems go away.

Unfortunately, they only accept very big bribes.

That’s a joke.

An awkward, edge-of-the-seat joke that makes people squirm. Especially if the envelope of Bin Ladens (500 euro notes) is still in their back pocket.

And it really isn’t fair to the many funcionarios who do try their hardest to help the sweating messes who sit down at their desks.

There are far more of them than you think.

Zen Tip: When you find one, befriend their families, bring them chocolates and offer them no-strings sex.

The zen art of surviving Gran Canaria bureaucracy

The first stage of survival is preparation.

The photocopier is your friend

You need the originals and at least five photocopies of every single identity document that you possess. Think five is too many? It isn’t, especially if you plan to visit multiple offices in one day. Make it 10.

Remember that while the NIE is a universal ID number in Spain, the social security issues it’s own ID numbers. Yes, it makes our eye twitch too.

And that the Libro de Familia does have a use (let us know if you discover it).

Do it write: Take a pen

Government departments don’t provide them because disgruntled folk stay sane by stealing them.

Zen Tip: Take two and make someone’s day.

Pay the price; Take money

You need change to pay for the forms that you queue to fill in. Just to annoy, the form desk never has change.

And take cash as trips down Funcionario Lane often involve popping out to the bank to pay a fee.

Where’s the nearest bank?

Ask the security guard on the door.

Zen Tip: The security guard knows everything.

Queueing is an opportunity

Since you know that you are going to spend all day queueing, treat it as an opportunity.

An opportunity to catch up on your emails, or read that book you nearly finished on the beach. Or to catch up on your meditation. Odds are that you’ll attain enlightenment just before Desk 6 calls your number.

But  you won’t be allowed into Nirvana because you forgot a photocopy.

Zen Tip: Never use headphones  in Spanish queues. Funcionarios regard them as a personal insult and will ruin your day.

Accept the inevitable

The zen art of surviving the Canarian queue is to accept that you are doomed to fail, at least temporarily.

When you find out that you’re missing a final bit of paper, or that Señor Vital Stamp is on holiday, take it in your loser stride.

Zen Tip: Always tell yourself that everyone gets their paper in the end. It’s not true, but it’ll keep you going until rum O’clock.

Pay someone to help

Italy recently made headlines because of a new breed of professional queuers. Spain invented them years ago.

They are called gestorias. For a reasonable fee, a gestoria takes over the entire process of getting your Gran Canaria paperwork sorted out.

You do, of course, have to queue in their office to sign the bits of paper that authorise them to do it. Good ones give you a biscuit while you wait.

Never lose control

If the whole process is getting you down, if queue rage is growing within you and your inner shouty guiri is about to escape, do what the locals do and go for coffee.

Scared you’ll lose your place in the queue? Get another number as you leave, or find the coffee machine. There’s always a coffee machine.

Then picture yourself walking out of the door into the sunshine. The Canaries are singing in the trees, a stranger high fives you, there’s a unicorn under the rainbow.

You have the paperwork. You are free.

Until mañana.


Claim Your Gran Canaria Resident Travel Discount

How to claim your Gran Canaria resident travel discount for Canary Islands travel

This certificate gives residents discounted travel in the Canary Islands

 

A big perk of being a Gran Canaria resident is the 50% discount on all air and ferry travel between Canary Islands and between the archipelago and Mainland Spain.

How to claim your Gran Canaria resident travel discount

The system is now automatic and most people don’t need a bit of paper to prove residency. The ferry and airline companies should be able to check online whether you are resident. They use a computer system called SARA and don’t need your permission to check you residencia status.

The Gran Canaria resident travel discount system works well until ‘computer says no’. If you’ve just got your residencia, or changed empadronamiento, you may need a ‘Certificado de Residencia’ from the Ayuntamiento.

Most ayuntamientos now let you apply for a certificate online and issue it for free. For example, in Las Palmas you can get a PDF certificate here in about a minute.

If you have any problem with the online system, get an online certificate or go to the Ayuntamiento with your passport, residencia paper and photocopies of both (always take photocopies of everything). The process takes a few minutes (once you get through the queue) and costs a few euros max.

Travel certificates are valid for six months.

Once you present your certificate to an airline or ferry company, you’re registered with that company and shouldn’t need it again.

Getting the Gran Canaria resident travel discount for children

Las Palmas residents can apply using the same form as adults use, but some small ayuntamientos don’t off a children’s option online. You have to go to the office and get them.

You need passports and residencia papers for parents and adults, and the libro de familia (now you know what it’s for).

Familia númerosa discounts

If you have three or more children, you get further travel discounts thanks to the Canarian government. You’ll need an official certificate from their offices. Here’s what you need to qualify for familia númerosa status, and all the paperwork you’ll need to get  the certificate.


The Guru Guide To Property Taxes in Gran Canaria

Gran Canaria property tax guide

Gran Canaria property tax guide

Buying a property in Gran Canaria costs about 10% of the price you pay once you factor in taxes and fees. Selling a property involves some costs but these only add up if you profit from the sale. The annual tax burden of owning a property in Gran Canaria is low.

Annual property taxes in Gran Canaria

IBI

An annual property tax set by the local Ayuntamiento that is between 0.5% and 1% of the official value of your property (much lower than the market value). The IBI rate in Las Palmas is currently 0.73%.

Other ongoing costs

IBI is the only monthly tax cost that you have to pay in Gran Canaria (there is no council tax). However, if you live in a building or a complex you have to pay a monthly communidad fee which is your share of costs like communal electricity, lift and pool maintenance and insurance.

The amount varies depending on the building and the facilities and services it offers.

Non-resident property owners must pay income tax on any rental income, plus IGIC (VAT) if they rent their property on a short -term basis. Even if a non-resident property owner doesn’t rent out their property, they still have to pay a small annual tax.

Article on non-resident property taxation in Gran Canaria.

Gran Canaria property taxes at  purchase

ITP or re-sale purchase tax

Buyers of re-sale property (as opposed to a new build) are required to pay the Impuesto de Transferencia de Propiedad which is 6.5% of the price paid for the property.

New Properties purchase tax

This is currently 7% if the house is finished or is being built at the time of the purchase. It is paid by the buyer.

A property buyer only ever has to pay one of the above two taxes.

Other fees

While not strictly taxes you also have to pay Notary fees (around 300 euros for most properties, more if you buy with a mortgage) and Property Registry fees (around 300 euros). Most buyers use a Gestoria to handle the paperwork associated with a purchase (they charge around 250 euros).

Along with the  10% taxes and fees, you’ll need a minimum  deposit of 20% if you get a mortgage (30% for non-residents) and 300 euros to pay for a valuation of the property you want to buy. Spanish banks also insist that you take out life insurance and property insurance at the same time as the mortgage.

Gran Canaria property taxes at sale

Plusvalía municipal 

Paid by the seller to the Ayuntamiento where the property is located, this is also called the impuesto sobre el incremento de valor de los terrenos de naturaleza urbana (IIVTNU).

You pay plusvalia on the increase in value of the land that a property occupies during the period that you own it (capped at 20 years) and the amount varies depending on the period of ownership and the rates set by the Ayuntamiento.

Incremento patrimonial 

Capital gains tax paid to the Spanish Treasury; Based on the difference between the sale price and the price paid by seller when he/she originally purchased the property (you can offset costs of improvements so keep your new kitchen and bathroom facturas).

As of 2016, the capital gains tax rate in Gran Canaria is 19% for the first 6.000 Euros, 21% from 6.000 to 50.000 Euros and 23% from that last amount upwards.

However, one advantage of the fall in Gran Canaria property prices over the last 10 years is that few sellers have to pay capital gains tax.

Tax exemption

Avoid paying capital gains tax by reinvesting the money from the sale of a main residence property  into another main residence property within two years. EU nationals, even non-residents, can also avoid this tax if they buy a new main residence property anywhere in the EU within two years.

To claim the exemption you need to be able to prove that a property has been your main residence. A good reason to get a ‘certificado de empadronamiento’ certificate from your Ayuntamiento as soon as you buy your house.

Mortgage cancellation fees

If you cancel a mortgage when you sell a property, expect to pay 1% or more of the outstanding balance for the privilege, plus up to 1000 euros to register the cancellation at the Notary and Property Registry. The fine for abusing a bank manager is significantly higher.

This Guru Guide was written by Laura Leyshon, our favourite Las Palmas estate agent.


The Guru Guide To Getting A Gran Canaria Mortgage

Getting a Gran Canaria mortgage

Getting a Gran Canaria mortgage

The process of getting a Gran Canaria mortgage can be long and Spanish banks have become cautious since the crisis.

However, after several years of shell-shock, they have started to lend again and competition is beginning to heat up in the mortgage market.

Getting a Gran Canaria mortgage

To get a mortgage you must have a 20% cash deposit (plus the 10% in cash that it costs to buy a property in Gran Canaria) and prove to the bank that you can make the repayments. In general, they only lend if your liabilities (existing loans, mortgage payments) represent less than 35% of your monthly income.

For example, if you want to take out a mortgage which will be 350 euros a month, you must earn 1000 euros a month and not have any other loan payments. They will check your ability to pay by requesting the following documentation…

  • wage slips from the last 3 months
  • bank statements for the last 6 months
  • If you are self-employed, copies of your last 3 years of accounts (with an auditor’s stamp) and copies of you last 12 month’s business bank statements and your last 6 months personal bank statements).

As always, you will need to feed the photocopier with your ID, residencia and the one piece of paper you didn’t bring with you. 

Banks in Gran Canaria do NOT take future rental income into account when calculating the amount of money they will lend you to buy a property.

Spanish banks currently offer mortgages of 60-80% of what a property valuation firm says that it is worth (you pay about 300 euros for this valuation as part of the mortgage application process).

Most banks offer variable rate mortgages that last from between 12 and 40 years.

2017 update: Residents can now borrow up to 90% of the purchase price from the right bank.

Gran Canaria mortgage interest rates

Interest rates in Spain vary, but are generally a little lower than in the UK. The rate is set using the EURIBOR interest rate published by the European Money Market Institute.

Your mortgage rate will be expressed as EURIBOR plus a percentage (eg. Euribor más 0.75%) and varies depending on whether the EURIBOR rises or falls. With the rate currently negative, mortgages in Spain are at rock bottom levels.

It is always worth applying to several banks (you only have to gather the paperwork once) as the rate, property valuation, and other conditions vary considerably between banks and you never quite know what headquarters in Madrid (all applications are sent to Madrid for approval) will say.

There is no harm in playing the banks off against each other.

Ask for a copy of one bank’s offer and then take it to a different bank to see if they can improve the offer – they often will. Then take the improved offer back to the original bank – you may get a pleasant surprise.

 Gran Canaria Mortgage costs

During the mortgage application process, you have to pay for a valuation by a professional valuation firm (200-300 euros) and you will also pay a gestoria (bureaucracy consultant/paperwork company) to handle all the paperwork (around 250 euros); your bank will assign one, you’ll pay for it.

Spanish banks have a habit of attaching other products to their mortgages to boost their profits. For example, you will have to pay for annual life insurance that covers the entire mortgage, and property insurance that covers its replacement value in the case of a fire, etc. Often you get the best interest rates if you agree to their add-ons.

Non-resident mortgages in Gran Canaria

Non-residents need a minimum deposit of 30% plus the 10% in fees and taxes that you need to buy a property. That’s a minimum of 40% of the value of a property befoe you can get a mortgage as a non-resident.

You may also be asked to provide an aval (guarantor). This will be somebody usually based in Spain who agrees to pay in the event of you being unable to.

New Build Mortgages

As well as paying slightly more IPT tax (7% rather than 6.5%), buying a new build property has the disadvantage that the constructor (builder) or promotor (promoter) often has a mortgage deal agreed with a particular bank. The rates and conditions are fixed and you have to accept them.

Changing mortgages

With rates as low as they are at the moment, there is rarely much benefit to changing your mortgage provider as the process is long and expensive (fees are around €3000). However, if you are locked into a mortgage with high rates, it is worth looking into.

The Clausula Suelo

Spanish banks used to put a floor under the interest rate on their mortgages which basically locked in their profits if interest rates dropped. However, the EU has ruled this floor, known as the clausula suelo, illegal and told the banks to scrap it and TO RETURN ALL THE EXTRA, ILLEGAL INTEREST THEY COLLECTED.

If you have a mortgage in Spain with a clausula suelo, you are entitled to go to your bank and demand that they return all the excess interest you paid over the years.

These sums can be substantial so don’t expect your bank to hand it over without a scrap; They aren’t exactly falling all over each other to obey the courts.

Rather than give you the cash, the bank knocks what they owe you off the outstanding mortgage debt.

For the latest on this story, please read this article.

The best Gran Canaria mortgage banks

Mortgage offers change all the time so we recommend that you shop around extensively and apply at several different types of bank…

  • The traditional Spanish banks such as BBVA and Santander
  • The local banks such as Bankia and / or a Spanish caja (equivalent to a building society and just as endangered).
  • A foreign bank such as Bankinter and Deutsche Bank
  • An alternative bank such as EVO.
  • Online banks such as ING Direct.

Help getting a Gran Canaria mortgage

If you speak fluent Spanish and know the local property market, feel free to ignore this advice and use a local mortgage broker or go direct to the banks.

Use a good local estate agent when you buy a Gran Canaria property: They will help you with the process of getting a Gran Canaria mortgage and make sure that you pay a fair price for your property.

Best of all, estate agency services are free for the buyer as the seller pays all their fees.

In Las Palmas and north Gran Canaria, talk to Laura at Las Palmas Property and read their guide to getting a Gran Canaria mortgage in 2017.

In south Gran Canaria, just go to Cárdenas Real Estate.