Mortgage products
Location: Mainland Portugal.
Type of Loan: Repayment for purchase or remortgage.
Purchaser: Individuals or companies.
Minimum loan: €150,000.
Maximum loan: None, but mustn’t exceed 75% of property valuation
or purchase price (whichever is lower).
Term: 5 to 30 years up to age 70.
Currency: Euro, Sterling and other major currencies.
Rate of interest: See rate guide.
Fees: Bank fees vary but you should allow for 10-16% of the mortgage
amount. You should also allow around €250 for the mortgage valuation.
In total, you should budget for around 16% of the purchase price to
cover all notary fees, legal costs, bank charges and taxes. You will
also have to pay a fee for registering the lender’s interest
with the land registry.
Lending criteria
There are two main criteria for determining how much you can borrow:
the value of the property and your financial situation.
Most Portuguese lenders take into account your existing liabilities,
including mortgage/rent payments, personal and bank loans, and maintenance
payments. When these are added to your proposed Portuguese mortgage
payments, the total must not exceed 35% (this percentage can vary)
of your net monthly income.
Lenders require proof of income, which can comprise earned income,
pension, investment, or rental income. However, not all lenders take
all of these into account when calculating how much you can borrow.
Savills Private Finance (SPF) has arrangements with a number of Portuguese
lenders enabling us to offer a bespoke service and attractive terms
and conditions.
Insurance
Portuguese lenders often require you to take out life assurance,
which you can buy in the UK. Buildings insurance is compulsory and
often sold by the lender. SPF can provide independent advice for all
your insurance needs.
Valuation
Loans are available up to 75% of the mortgage valuation and Portuguese
banks will lend only on the lower of the valuation or the purchase price. The recorded
transaction values of at least six similar properties sold in the
area in the preceding six months are taken, with the valuer deriving
an average price per square metre. This figure is then multiplied
by the size of the property you are purchasing to arrive at your valuation.
Legal issues
Buying property in Portugal is a regulated activity. The contract
- contrato de promessa de compra e venda - is agreed and signed. You
must put down a deposit of 10-30% of the purchase price; if you pull
out, you may forfeit this. If the vendor withdraws from the sale,
they must pay you twice the sum they received as a deposit.
The balance of the purchase price and all fees are payable on completion
to the notary advogado. Both you and the vendor sign the escritura
de compra e venda at this point – the definitive contract equivalent
to the property deeds.
Remember: don’t sign anything until you have taken legal advice
and don’t put down a deposit before ensuring that it is refundable.
You should also check what legal costs and government taxes you have
to pay before committing yourself to a purchase or remortgage.
SPF endeavours to secure the loan on your Portuguese property within
your preferred timescale but delays may occur owing to the Portuguese
legal and banking system.
Completion
In order to complete the purchase you must be present along with the
notary, vendor, lawyers and the lender’s representative. A power
of attorney may be used to sign the deeds on your behalf.
Applying for a mortgage
It is advisable to arrange a mortgage in principle before committing
to a purchase. This will enable you to find out how much you will
be able to borrow, so you don’t waste time looking at properties
beyond your budget. Even if you haven’t found a property that
you wish to buy, our international division can help you to establish
your affordability and issue an approval in principle based on your
current financial situation.
If you have already found a property to purchase, we will send you
a full mortgage application pack via email or in the post. If the
property is still under construction, we can keep your file open until
you tell us it is ready (the application can’t be fully processed
until the construction is completed).
Should you require funds to put towards a deposit, or if you don’t
qualify for a Portuguese mortgage, we may be able to help raise finance
for your proposed property.
Contact SPF on 020 7877 4710 or email international@spf.co.uk
CHANGES IN THE EXCHANGE RATE MAY INCREASE THE STERLING EQUIVALENT
OF YOUR DEBT
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SAVILLS PLC - INTERNATIONAL DEPARTMENT
SPF is part of the Savills Group, the international property consultancy formed in 1855. The Savills plc International team is
based in London and is dedicated to providing a service to meet an individual's overseas property needs.
For more information about Savills plc - International click here.
