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Portuguese Mortgages
Step by Step Guide to apply for a Portuguese Mortgage:
1) Calculate your budget – contact our Portuguese consultant at Baydonhill International Mortgages (BIM) and find out the maximum that you are able to borrow.
2) Decide on a property. Sign the Contrato de Promessa de Compra e Venda and transfer the initial deposit with Baydonhill FX to secure the property.
3) Obtain a No. de contribuiente and open a Portuguese bank account
4) Submit full mortgage application to BIM with all required supporting documentation in order to obtain financial approval.
5) Secure interest rate by receiving full approval for your mortgage application, upon return of a positive valuation report from the bank’s appointed surveyor.
6) Receive your mortgage offer - your Lawyer will pre-register the mortgage deeds at the Land Registry and inform your bank when this has been done
7) Set up an International Regular Payment Plan with Baydonhill FX to send an agreed amount of Euros every month to your Portuguese bank account, covering monthly mortgage repayments, utility bills etc.
8) Attend mortgage completion in Portugal, or else arrange a Power of Attorney to do this on your behalf if you are not able to be present. Funds will be released as per agreed.
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Eligibility & criteria
Mortgages are in Euros and will be secured on your Portuguese property. Mortgages are full status and proof of income and outgoings will be required. It may also be possible to obtain a mortgage in the currency in which you receive your income, if this is different to Euros.
The maximum loan to value (LTV) available in Portugal is 80% of the purchase price. The minimum loan amount when obtaining a mortgage through BIM is €100,000. For loans in alternative currencies, the maximum LTV is 70%.
Portuguese lenders assess eligibility on the applicant's capacity to repay the loan. As a guideline, your existing monthly outgoings and the repayment on your Portuguese mortgage should not exceed 35% of your net monthly income. A percentage of rental and investment income can also be considered. Mortgage, rent, personal loans and maintenance commitments are considered as outgoings. Speak to our Portuguese consultant to find out the maximum that you are able to borrow.
Certain Portuguese lenders will consider applications in the name of an Offshore company, however this is not widely available during this current climate and will be at the lender’s discretion. Please advise us if this is how you wish to purchase the property, as this will affect the products and rates available to you.
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Types of Portuguese Mortgages
Mortgages can be obtained for the purchase of off-plan, new or existing properties.
For construction loans, plans must be provided at the time of application. Funds will be released by the lender in accordance with the plans and following the bank’s valuation to ensure the agreed stage has been reached.
Capital raising available on your property in Portugal and the amount you can borrow will be determined by a valuation arranged by the lender.
The refinance of your existing Portuguese mortgage in order to take advantage of a more competitive interest rate is possible. However, refinancing will incur both costs at the Notary office and with the new lender. Furthermore, we recommend that you check with your existing lender if any penalties will be payable for cancelling your existing mortgage and corresponding land registry deed. You should be very sure that the costs of remortgaging do not outweigh the reduced monthly repayment.
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Portuguese Mortgage products
Products are available on an interest-only or repayment basis. Terms can be from 10 to 25 years however loans must be repaid by 80 years of age. Most mortgage rates are indexed against on the Euribor base rate. For an initial idea of rates and monthly repayments, use our quick quote online mortgage calculator, or else complete a personalized quotation request form and we will send you a tailored quotation.
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Buildings and Contents Insurance
Buildings Insurance is mandatory and will need to be in place for completion. Most Portuguese lenders prefer that buildings insurance is taken out with them directly, however if you select a foreign policy, the lender will require proof that the policy has been assigned to them.
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Documentation required
Portuguese lenders are legally required to request full documentation proving that the borrower can afford the mortgage repayments, and therefore you will be required to submit a significant number of supporting documents. Please see below for a summary of what will be required. A detailed list will be compiled based on your situation and sent to you with your personalised quotation.
* Proof of identity & residence
* Proof of income & outgoings
* Bank statements
* Property details
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Timeframe
A decision in principle can be obtained from a lender once all the requesteddocumentation has been submitted. This takes approximately 5 working days to obtain.
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Life Assurance
Life assurance is strongly recommend, but not required.
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Bank account
All lenders will require you to have an account opened with them and will assist you in the opening of this account.
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Monthly Mortgage Repayments
Please be aware that missing a monthly mortgage payment may have serious consequences and we therefore strongly advise participation in our International Regular Payment plan through Baydonhill FX. This service gives you peace of mind in the knowledge that your Portuguese mortgage repayments will be met automatically each month.
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Completion
Either a representative from the bank will be present to issue the cheques, or a transfer will be made following completion. You do not have to be present at completion and can give Power of Attorney if necessary. Your lawyer will be able to discuss this with you in more detail.
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Typical Set up costs for Portuguese Mortgages
Bank’s arrangement fee – This can be in the form of an application fee and a cost on completion, and varies from lender to lender. We would recommend you allow a minimum of €175 and up to a maximum of 1% of the loan amount to cover this.
Notary fees and taxes - payable at approximately 10%. If you take out a Portuguese mortgage a further cost will be passed on to you by your Lawyer for registering the charge of the lender with the land registry.
Valuations – these are carried out by the lenders and payable by the borrower. The valuation fee is approximately €175 but does vary from lender to lender and depends upon the size of the property you are buying.
BIM charges a non-refundable application fee of £250. A further fee may be payable upon completion of the mortgage. Please refer to your personalised quotation for confirmation.
We recommend that professional legal & tax advice should be sought to protect your own interests.
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£1 = 
$1.5201 / 
€1.1817
