Loan for home renovation in Mallorca: find the best one

Discover how to get the best loan for renovating your home. We explain what renovation loans are, show you top offers, and break down all the key points so you don’t overpay for your financing. Whether you're upgrading a flat in Mallorca or refreshing your family home, this guide has you covered.

What Is a Renovation Loan?

A renovation loan is a special financing product designed to help you pay for work on your existing property—whether you’re planning small repairs, medium updates, or a complete overhaul. Many banks and finance companies in Spain offer these loans to borrowers with a solid credit profile. Key details include:

Loan Amount:
Typically ranges from €1,000 to €100,000, depending on the lender and your renovation plan. Smaller amounts can cover minor repairs, while larger sums may be used for extensive remodeling.
Term:
Most loans are offered for up to 8 years, although some lenders extend the term to 10 years. Longer terms can lower your monthly payments, though you may pay more interest overall.
Interest Rates:
Rates usually range from about 5% to 15% TIN (Nominal Interest Rate), varying based on the lender, your credit score, and the amount financed. Some offers may include promotional rates for a limited period.

Explore all your options with our SpanischerHypothekenRechner.com tool to compare offers side by side.

What Can You Finance With a Renovation Loan?

Renovation loans cover a wide spectrum of home improvement projects. Here’s a breakdown:

Small Repairs:
For projects under €5,000—for example, fixing a boiler, repairing broken pipes, or replacing damaged doors and windows. These loans help you address urgent issues without a massive financial burden.
Medium Renovations:
For projects costing over €5,000, such as updating a bathroom, building a small porch, or removing a non-load-bearing wall. These improvements can significantly boost your home’s comfort and value.
Complete Renovation:
Some lenders offer loans up to €100,000 for comprehensive projects. These might include rehabilitating an entire facade, installing solar panels, upgrading electrical systems, or even combining several improvements into one package.

Note: Lenders usually require proof that the funds will be used for renovation—typically in the form of a detailed budget or multiple quotes from certified contractors.

Where Can You Get a Renovation Loan?

In Spain, two main types of lenders provide renovation loans:

Banks

Traditional Banks:
Institutions like Caixabank, BBVA, and Banco Santander offer renovation loans through their branches or apps. They often provide competitive interest rates if you are a long-term customer. However, expect that traditional banks may charge higher fees (e.g., opening fees, early repayment charges) and might require you to have an existing relationship with them.
Online Banks:
Newer players like Cetelem and Openbank offer streamlined applications and sometimes lower rates with fewer fees. These banks may have more flexible digital processes, making it easier to compare offers quickly.

Finance Companies

Also known as credit institutions (EFC), these lenders (e.g., Cofidis) specialize in personal loans and often focus solely on lending money. They usually offer: - Competitive Rates: With fewer fees compared to traditional banks. - No Customer Requirement: You don’t need to already have an account with them. - Fast Processing: Many offer online applications and quick approval times.

Tip: If you’re curious about your monthly payment or the overall cost, use SpanischerHypothekenRechner.com to run the numbers.

Can You Get a Mortgage to Renovate Your Home?

If your renovation project requires a large amount—generally more than €50,000—you might consider a mortgage for home renovation. Here’s what to know:

Suitability:
Mortgages for renovations are ideal for large-scale projects because they provide more funding (up to 60% of the property’s value) and come with longer repayment terms (20 to 30 years).
Interest Benefits:
They often offer lower interest rates (around 3% on average) compared to standard renovation loans, reducing your long-term costs.
Eligibility:
Not all banks offer mortgages specifically for renovations. Some may require that you use a traditional mortgage with a renovation add-on, while others might have specific products.
Alternative Option:
Loans with mortgage guarantee are available from private lenders or brokers. These tend to have higher interest rates (often above 10%) but may be easier to obtain if you have a strong need for funds.

Keys to Getting the Best Home Renovation Loan

Once you’ve mapped out your renovation project, follow these steps to secure the best financing deal:

Shop Around:
Request quotes from multiple lenders—including your regular bank, other traditional banks, and finance companies. Having several offers gives you leverage and a clear picture of what’s available.
Negotiate:
If you have a good credit profile or are a long-term customer, ask for improved conditions. Negotiate for lower interest rates or reduced fees. Sometimes a bit of bargaining can result in substantial savings.
Do Your Homework:
Calculate the total cost of each option—don’t just look at the monthly payment. Consider the overall interest and any hidden fees to determine the best deal.
Read the Fine Print:
Make sure you understand all terms, especially any clauses about early repayment fees or additional product requirements.

Bonus Tips: What to Consider Before Applying

Before you commit to a renovation loan, keep these two points in mind:

Get Multiple Contractor Quotes:
Request detailed estimates from several renovation companies. This helps you understand the true cost of your project and is often required by lenders.
Assess Your Repayment Capacity:
Ensure that the combined cost of your loan payments and any other debts does not exceed about 30% of your net monthly income. Overextending yourself can lead to financial stress.

Also, note that you don’t have to be a bank customer to secure a renovation loan—many finance companies are happy to lend without that requirement.

When Will You Receive the Money?

Most lenders approve and transfer funds within 2 to 3 days. However, if you’re borrowing a large sum, it might take 1 to 2 weeks for the funds to be disbursed.

What Happens If You Miss a Payment?

If you miss a payment, lenders will typically charge late fees and additional interest. If the default continues, they may initiate legal action and, in extreme cases, seize part of your assets—such as bank account balances or a portion of your income—to recover the debt.

With the right information and a bit of negotiation, you can secure the best loan for your home renovation. Whether you’re planning a quick fix or a full-scale remodel in Mallorca, being well-prepared will help you save money and avoid surprises.

Try SpanischerHypothekenRechner.com for personalized calculations and more financing options. Enjoy turning your renovation dreams into reality!