Mortgages In Portugal
Acthus Property Advisors wants to make the financing and purchase of your new property as easy and simple as possible. Our Financial Services department (Acthus Financial Services) will take care of every aspect, from agreeing exceptional and exclusive finance options from a number of International and Portuguese lending partners, to helping you understand the more complex aspects of property purchase law.
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Acthus Property Advisors will help you to complete any necessary documentation and keep you fully advised throughout the process, leaving you to sit back and enjoy your new investment.
Mortgage Arrangements
Normally, based on their valuation (Avaliação), Portuguese banks will lend between 70% and 90% of the value of the property for Portuguese citizens and legal residents holding a Residency Card, and 60%-70% to non-Portuguese citizens and non-residents. Of course other factors are taken into account such as income and age of applicant.
The mortgage company will send out a valuation agent (Calculista de Obra/Superintendente de Vistoria/Avaliador) to assess the value of the property (Vistoria) and the cost of this is included in the charges made by the bank for the mortgage application, which varies according to the purchase price of the property (usually around 1%). Once the mortgage has been applied for, funds will be required to cover the bank charges.
What is necessary to apply for a mortgage in Portugal?
- Proof of sufficient income to meet the mortgage payments
- Life Assurance (Segurança da Vida) to cover the terms of the mortgage
- Valid passport and identity card (Passaporte e Carta de Identidade)
- Pay slips (or two years' accounts for the self employed) and tax declaration from country of residence
- Residency card (Cartão de Residencia)
- Bank statements for several months proving receipt of income and loan repayments
- Medical examination (Atestado Medico) for insurance purposes
Working out the price range
It is important to establish the price range you can afford and most banks will offer to work out a simulation (Simulação) based on the price range required and average monthly income. The purchaser also needs to make sure they have enough funds to cover the deposit and legal fees.
There are three possibilities when seeking a mortgage:
- Directly from a Portuguese bank - the majority have English speaking staff and some even have international departments for foreigners. Most of the banks in Portugal have similar lending criteria on the terms of the mortgage, how much they will be prepared to lend, what mortgage products they offer and their arrangement fees
- Use a mortgage broker. The purchaser pays extra but has the added advantage of being advised how much can be borrowed and the best mortgage products to suit individual circumstances. They will save time and hassle with language and culture barriers and provide quotations from the lenders most suitable to the client
- Some estate agents (Agencia de Imobiliario) may offer a mortgage service and offer similar services to mortgage brokers
Life Assurance (Seguro de Vida)
All mortgages in Portugal require life assurance and many lenders will offer packages from their own life assurance company partners. Some lenders have different policies and insist on both full disability cover as well as life cover, while many will require a medical examination.
Type of Mortgages:
- Capital & interest repayment mortgage (variable rate)
- A flexible mortgage where the repayments are known and the interest rate applicable is revised on a regular basis. If interest rates fluctuate the repayments stay the same - only the term of the loan is affected. It is possible to make lump sum payments or redeem the mortgage early; early settlement usually attracts a penalty which can be negotiated. If the purchaser decides to convert to a fixed rate they will have to pay a charge in the event of early redemption.
- Repayments are fixed for the whole term of the mortgage. The property owner knows exactly what will be paid each month and how many payments will have to be made. Fixed rates are usually higher than variable rates. Financial penalties can be incurred for redeeming the mortgage early, or changing to a variable interest rate. It is advisable to check what each bank's financial penalties are.
- These are rarely offered to non-residents
| When buying property in Portugal and would like to finance your new Portuguese property we are able to offer you a tailor made mortgage. Below you will find a summary of details related to Portuguese mortgages.
Our Products
- We offer Portuguese mortgages for habitable residential property.
- Financing can be arranged for acquisition, construction, re-mortgage and capital raising.
- We can offer interest-only up to a max term of 10 yrs and repayment mortgages on a variable and fixed rate.
- A minimum of 8 weeks should be allowed from application to a lender to completion.
Eligibility & Criteria
- All Portuguese mortgages are full status and proof of income will be required.
- Terms can be from 10 to 30 years.
- Portuguese lenders assess eligibility on the applicant's capacity to repay the loan. Approximately one third of monthly income can be taken up with existing mortgage, loan repayments and the proposed Euro mortgage.
- In some cases potential income from the property in Portugal can be taken into consideration.
- Portuguese lenders will consider applications in the name of a Company.
Acquisition Mortgages
- Max LTV is 80% of the purchase price.
- Variable mortgages are fixed for an initial period and then recalculated using the EURIBOR (European Interbank Offered Rate) plus a margin.
- Mortgage Products include:
- Repayment:
- Variable rates from 4.30% with margins from 0.60%.
- Interest Only:
- Variable rates from 4.45% with margins from 0.75%.
- Renovation/Construction Mortgages
- Max LTV is 80% of the final value of the property.
- Stage payments are available.
- The lender will request surveyor's reports at each stage
Capital Raising
- This product allows Portuguese property owners to raise funds on property that they have already purchased.
- Max LTV is 75% of the bank's valuation.
- This scheme is available to both employed and self-employed clients, regardless of the purpose of the loan.
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