Mortgages in Portugal
In Portugal, financing can be obtained for resident and non-residents. Mortgages for Portugal for non-residents can be acquired for the purchase of a property, construction of a property, and renovation projects. The purchase of land, can as a general rule, not be financed.
You will find many websites offering 80/90/100% financing which, in pre-recession was possible. In today’s market, we would advise to calculate 70/75% financing in order to obtain good mortgage conditions.
In Portugal, the bank will calculate from the loan to value, i.e. valuation price of the property which is not linked with the purchase price. The purchase price can be higher or lower than the valuation, giving you a higher of lesser then 70/75% financing.
For non-residents, mortgages are available for a maximum of 30 years, with an age limit of 80 years of age. For example, if you want to acquire a mortgage when you are 60 years of age, you can finance for a maximum of 20 years.
For Portuguese residents, the terms & condition are normally slightly more flexible, as the bank has a larger security and can check the history of the client easier. The loan to value will in general be 75/85%, with 80 years of age being the limit to arrange the financing.
Costs to obtain a mortgage
The bank in Portugal works in a different way and will only process a mortgage application once you have chosen a property. We recommend that you work with a mortgage broker who can pre-approve your process before you start looking at properties, to give you an idea of what amounts of financing you can obtain and what the conditions are.
Once you have identified a property, the bank will send an independent engineer to the property to value the property. These costs will vary per bank, but calculate on max 400 euros +IVA.
Most banks will charge a ‘mortgage arrangement fee’, which varies from roughly 175 euros to 0,25% of the property valuation.
Other fees will include a bank administration fee which is mostly around 250-350 euros.
A Mortgage needs to be included in the registry of the property, which is done at the time of the property deeds, and has a total cost of approximately 2% (registration of the property + mortgage)
Last but not least, the stamp duty, which is 0,6 % of the mortgage value.