Buying in Portugal

Mortgage products

Location:                      Mainland Portugal.

Type of Loan:              Repayment for purchase or remortgage.

Purchaser:                   Individuals or companies.

Minimum loan:              €150,000.

Maximum loan:             None, but mustn't exceed 75% of property valuation or purchase price
                                    (whichever is lower).
                       

Term:                           5 to 30 years up to age 70.

Currency:                     Euro, Sterling and other major currencies.



Fees

Bank fees vary but you should allow for 10-16% of the mortgage amount. You should also allow around €250 for the mortgage valuation. In total, you should budget for around 16% of the purchase price to cover all notary fees, legal costs, bank charges and taxes. You will also have to pay a fee for registering the lender's interest with the land registry.

Lending criteria

There are two main criteria for determining how much you can borrow: the value of the property and your financial situation.

Most Portuguese lenders take into account your existing liabilities, including mortgage/rent payments, personal and bank loans, and maintenance payments. When these are added to your proposed Portuguese mortgage payments, the total must not exceed 35% (this percentage can vary) of your net monthly income.

Lenders require proof of income, which can comprise earned income, pension, investment, or rental income. However, not all lenders take all of these into account when calculating how much you can borrow.

Savills Private Finance (SPF) has arrangements with a number of Portuguese lenders enabling us to offer a bespoke service and attractive terms and conditions.

Insurance

Portuguese lenders often require you to take out life assurance, which you can buy in the UK. Buildings insurance is compulsory and often sold by the lender. SPF can provide independent advice for all your insurance needs.

Valuation

Loans are available up to 75% of the mortgage valuation and Portuguese banks will lend only on the lower of the valuation or the purchase price. The recorded transaction values of at least six similar properties sold in the area in the preceding six months are taken, with the valuer deriving an average price per square metre. This figure is then multiplied by the size of the property you are purchasing to arrive at your valuation.

Legal issues

Buying property in Portugal is a regulated activity. The contract - contrato de promessa de compra e venda - is agreed and signed. You must put down a deposit of 10-30% of the purchase price; if you pull out, you may forfeit this. If the vendor withdraws from the sale, they must pay you twice the sum they received as a deposit.

The balance of the purchase price and all fees are payable on completion to the notary advogado. Both you and the vendor sign the escritura de compra e venda at this point - the definitive contract equivalent to the property deeds.

Remember: don't sign anything until you have taken legal advice and don't put down a deposit before ensuring that it is refundable. You should also check what legal costs and government taxes you have to pay before committing yourself to a purchase or remortgage.

SPF endeavours to secure the loan on your Portuguese property within your preferred timescale but delays may occur owing to the Portuguese legal and banking system.

Completion

In order to complete the purchase you must be present along with the notary, vendor, lawyers and the lender's representative. A power of attorney may be used to sign the deeds on your behalf.

Applying for a mortgage


It is advisable to arrange a mortgage in principle before committing to a purchase. This will enable you to find out how much you will be able to borrow, so you don't waste time looking at properties beyond your budget. Even if you haven't found a property that you wish to buy, our international division can help you to establish your affordability and issue an approval in principle based on your current financial situation.

If you have already found a property to purchase, we will send you a full mortgage application pack via email or in the post. If the property is still under construction, we can keep your file open until you tell us it is ready (the application can't be fully processed until the construction is completed).

Should you require funds to put towards a deposit, or if you don't qualify for a Portuguese mortgage, we may be able to help raise finance for your proposed property.

Enquire now          Mortgage Calculator