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Getting a mortgage in Portugal

Mortgages

Basic Mortgage Facts 

Max 80% loan to value 

Max term 40 years 

€60,000 minimum loan 

Rates from 0.873% 

The Market 

The property market in Portugal remains strong, according to INE data, in Q3 2020 prices were 7.1% higher than Q3 2019. Steady demand is continuing to boost sales volumes though prices vary in different parts of the country. 

The stable political climate, peaceful environment, tax breaks, low corporation tax and great lifestyle choices have helped make the property market in Portugal an attractive option for overseas buyers. 

Should I raise finance from my UK property or take out a Portuguese mortgage? 

If you have sufficient equity in your UK property, you can choose to take out an additional or new mortgage to buy your overseas property. Bear in mind, even though there is no Portuguese lender in place to insist on certain processes, you should still seek legal advice and ensure independent checks are carried out on the property. 

One advantage of a Portuguese mortgage is that the lender will carry out its own checks on the property and arrange a valuation. 

Portuguese mortgage rates are particularly attractive (see example terms above) and present buyers with a good option to raise finance locally. 

Rates now start at 0.873% for a variable rate of up to 80% loan-to-value (based on the purchase price) and 1.2% for a fixed rate of up to 80% loan-to-value.  

Interest-only deals are rare so most mortgages are on a repayment basis with the maximum term 40 years. If you are 80 years or older, it is advisable to speak to a mortgage specialist as they are ways for you to obtain a mortgage. 

It is worth remembering that monthly mortgage payments will be in Euros and the Sterling rate will vary so it is a good idea to have a currency strategy in place to mitigate any fluctuation if you are paying your monthly mortgage payments from the UK (contact aplaceinthesuncurrency.com for more information). 

Portuguese banks, mortgage brokers & British buyers 

Mortgage rates from Portuguese banks are very low and lending conditions continue to improve. There is strong interest from Portuguese lenders to assist foreigners in buying property. 

You can approach the different banks directly in Portugal but keep in mind that each one has different criteria and you may not necessarily find the best deals available. The language barrier may also prove difficult. 

Another option is to use a registered mortgage broker who understands the market and has relationships in place with the different lenders and can find the best product to suit your requirement. 

Speak to a mortgage broker 

If you decide you want to explore Portuguese mortgage options via a specialist mortgage broker then you can make an enquiry via the box on the right, no obligation and no fee. 

Your enquiry will go to a third-party company based in Portugal that helps British buyers research the local mortgage market and secure the funding they need. The broker earns their fee from the bank. 

It is worth understanding the lending criteria as early as possible in order to find out how much you can borrow as this will impact the value of properties you search for. You will also need to understand the purchase costs such as legal fees and taxes, download our guide to buying in Portugal here. 

Pre-approval on a mortgage will tell you exactly how much you can borrow, at what interest rate and for how long. This sort of preparation will mark you down as a serious buyer when you start speaking to agents and can assist when negotiating on price with the vendor.