Portuguese Mortgages

Buying a property in Portugal may be an attractive investment - as your main residence, as a 2nd residence for vacations, or to rent out as a source of income.

Property prices in parts of Portugal may be relatively cheap - certainly compared to the UK - but are currently  increasing rapidly.  If you rent out your property in Portugal, you may offset the interest you pay on a mortgage for the property against the rental income for tax purposes.

As a Portuguese Resident, you may borrow up to 90% (75% as a non-resident) of the lower of the property price and the property valuation.  The valuation is assessed according to defined criteria. The maximum mortgage term available depends on the lender typically 20 to  30 years or until the borrower is aged 70 which ever is sooner.  Mortgages are normally repayment mortgages, although a period of interest only payments may be available.

Portuguese lenders apply criteria to ensure that the mortgage repayments are affordable - typically your mortgage repayment, together with other liabilities, loan repayments and rent, should not exceed 35% of your net income.  Lenders will require proof of income.

You will need to take account of currency exchange issues.  If you do not borrow the money in Euros, you may need to pay up to 5% to 10%  in bank and conversion fees before you can use it for purchasing a property in Portugal .  Currency fluctuations can work for or against you - the cost of converting currency will always be against you.

You are must seek professional legal help from a specialist lawyer who speaks Portuguese well and can offer advice on the Portuguese Legal system.  Buying property in Portugal is a regulated activity.  You will need to put down a deposit of up to 30% of the purchase price when you sign an initial contract - you may lose this deposit if you pull out of the sale.

Home | Elba-BIS | Site Map | Links