Getting a Mortgage in Portugal

Many people purchasing property in Portugal will look to finance their purchases partly with a Portuguese mortgage.

What mortgage suits you best?

There are many factors that should be considered when deciding which mortgage product is best for you. As always getting your personal and financial details analysed is always the best staring point so that you can be assed for both eligibility and affordability for a loan.

Whilst many people will focus just on the pricing for a mortgage facility it is important to remember that there are other factors that need to be looked at. Some banks have a mandatory requirement for life insurance for example which can escalate the costs of a mortgage and require inconvenient medicals so for many non residents they are normally best avoided.

Other lenders may have more competitive rates but a cap on the level of borrowing whilst others may not offer fixed rate products. One important aspect that many people are unaware of is the different ways that a bank will analyse your affordability for a certain loan amount, some banks will stress certain types of income streams more heavily than others whilst some banks may not consider rental income for example. In summary some profiles may be better suited to certain banks than others when looking to obtain a formal mortgage approval.

The important thing to remember is to ensure that your data is carefully looked at and that whenever possible to get a range of options on a proposal that may be suitable for you.

Mortgage options

Repayment Mortgage:

This is the most commonly used product which is typically structured on a 30 year term (ages of applicants permitting) repayments cover the interest and a portion of the outstanding capital so that at the end of the term the debt is duly repaid.

Fixed rate repayment mortgage:

This allows for clients to opt for a 1-15 year fixed rate product which then reverts to variable rates repayments thereafter.

Loan-to-Value Mortgage:

Mortgages in Portugal are generally up to 70% for non resident so clients should budget to have circa 30% of the purchase price at their disposal plus the cost of taxes and fees.

For Portuguese nationals residing overseas it is possible to go up to 85% of the purchase price but they must be in possession of either a Portuguese passport or a Portuguese identity card.

Mortgage Conditions:

Purpose
- Purchase or construction of property and equity release

Amount
- Up to 85% Subject to eligibility

Term
- Up to 50 years, not exceeding 75 years of age of oldest applicant;

Competitive spreads
- Starting at 1.25% for a limited period

Conditions Apply;
- Standard margins between 1,70% and 2.50% (depending on LTV and loan amount);

You should also consider using equity that is in your property for the initial deposit. This keeps any cash reserves and makes excellent use of the gains seen on most UK & Irish properties in recent years.

Go to our Mortgage Documents checklist page for further information.