Type of loan
Repayment mortgages for the purchase or remortgage of Portuguese property. Capital raising is also available.
Purchaser
Purchasers can be individuals or companies.
Loan size
The minimum loan size on a Portuguese mortgage is €150,000. There is no maximum but it must not exceed 75% of the property valuation or purchase price (whichever is lower).
Term
5 to 30 years up to age 70.
Currency
Euro, Sterling and other major currencies.
Fees
Portuguese bank fees vary but you should allow for 1% of the mortgage amount. A Portuguese mortgage valuation is approximately €250 and a fee is also payable for registering the lender’s interest with the land registry.
Lending criteria
Lenders determine how much you can borrow by taking into account your financial situation and assessing the value of the property.
Most Portuguese lenders take into account your net monthly income. You must be able to afford your existing liabilities including mortgage/rent payments, personal and bank loans, and maintenance payments as well as your proposed Portuguese mortgage payments.
Portuguese lenders require proof of income. This can be earned income, pension, investment or rental income. However, not all lenders take all of these into account.
SPF has arrangements with a number of Portuguese lenders, offering minimal and bespoke underwriting terms and conditions on Portuguese mortgages.
Insurance
Buildings insurance on Portuguese property is compulsory and often sold by the lender. Portuguese lenders also often require you to take out life assurance, which you can buy in the UK. SPF can provide independent advice for all your insurance needs when buying property abroad.
Valuation
Loans are available up to 75% of the mortgage valuation, however, Portuguese lenders will lend only on the lower of the valuation or the purchase price.
Legal issues
Portuguese property laws and legislation.
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 this amount.
The balance of the purchase price and all fees are payable on completion to the notary advogado. Both you and the vendor sign the contract at this point , which is equivalent to the property deeds.
Don’t sign anything until you have taken legal advice and don’t put down a deposit before ensuring that it is refundable.
Completion
In order to complete on your property in Portugal, 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. The seller will hand over the keys and you will become the official and legal owner of a Portuguese property. Congratulations!
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 can borrow, so you do not consider Portuguese properties that are not within your budget. If you have not found a property in Portugal yet, the SPF international team can help you establish your affordability and provide you with an approval in principle based on your financial situation.
If you have already found a Portuguese property, SPF can send you a mortgage application pack.
Contact SPF on +44 (0) 20 7877 4710 or email international@spf.co.uk