News & Insights

How to get a mortgage in Portugal as an expat


Although Portugal isn’t a large country, there’s a great deal of difference between the north and south, certainly in terms of weather. And although it’s a relatively inexpensive place to live, property prices can vary wildly depending on location. You can expect to pay a lot more for property in the urban centres such as Lisbon and Porto, and naturally the popular holiday destinations like the Algarve come at a premium. But further afield there are handsome country properties to be had for far less than you might expect; and in a compact destination like this, you’re never too far away from the cultural centres.

Mortgage rates in Portugal

After the housing market crash in 2008, Portuguese mortgage lenders are understandably wary about loaning money to house buyers and will want firm reassurance of your ability to repay the loan. That said, foreign buyers can expect to be able to borrow somewhere in the region of 60-70% of the property’s value – rising to 90% if you are a fiscal resident. As you would expect, Portuguese mortgage providers will only offer you a loan after they have made a thorough review of your financial situation. In basic terms, banks will use a comparison of your outgoings compared to your income; your outgoings including mortgage payments should not exceed 30-35%.

Mortgage interest rates in Portugal

The vast majority of mortgages for property in Portugal are standard repayment loans, where you will pay back the capital borrowed from the very first month. At the time of writing, interest only mortgages are unavailable, but this situation may change in the future.

Portuguese mortgage rates are set according to the Euribor rate plus the spread charged by your bank. Historically these have tended to be in the region of 3-5%, but interest rates have been falling steeply in recent months so better deals may be available.

Documents needed to apply for mortgages in Portugal

You will be required to produce some or all of the following documents for your Portugal mortgage application:

  • Copy of passport
  • Copy of Portuguese tax number
  • Proof of address (copy of recent utility bill)
  • Credit report
  • Bank statements for the last 3 consecutive months
  • Savings account statements for the last 3 consecutive months
  • Latest valuations of any investment portfolios
  • Last 3 pay slips
  • Latest P60 (tax submission)
  • Employers reference letter

Applying for Portugal mortgages

Once you have been through the preliminary stages of working out what you are eligible to borrow, and have selected a property in your price range, it will be necessary to deal directly with the bank or mortgage broker. Generally, they will provide you with a quote on a no-obligation basis and this can be dealt with at your local branch. If you then chose to go ahead, a formal quote will be provided setting out the details of the loan and conditions.

Once you are happy with the proposal, you will need to open a bank account with the lender and deposit enough funds to cover short-term loan application costs. Then the bank will organise a valuation of the property, on receipt of which it will begin the completion process.

It´s wise to appoint your own local, qualified solicitor to oversee the proceedings, and preferably one who speaks your native language. They will finalise the completion directly with the bank and organise a convenient time for the signing of the deeds at the notary’s office.

With mortgage rates in Portugal being so low currently, it could be the ideal time to make your dream property purchase, but there are a good many things to consider before making the leap. Tax considerations should not be discounted if you are planning to buy a second home and remain resident in your present country. As always, speaking with a regulated, qualified, local financial advisor is a good way to ensure that your tax obligations are met, and that you are not paying more than you need to.

The above information was correct at the time of preparation and does not constitute investment advice and you should seek advice from a professional adviser before embarking on any financial planning activity.


Related News

Expat Tax Planning in 2019

Calendar PlannerTax planning should be a New Year priority for any British citizen who has recently become an expat.

Just last year HM Revenue & Customs increased its efforts to ensure expats met their full tax obligations and has begun to successfully use EU laws that encourage co-operation between member states. “We will not hesitate to use all legal means to collect taxes that are owed,” commented an HMRC spokesperson. Despite this tough talking, the EU this year criticised the UK for its poor record of cross-border tax collection.

It is important to remember that although the HMRC’s new stricter approach remains at an early stage, it is already paying dividends for the government, which estimates that it lost £1.7bn in tax revenue in 2016-17, compared to £4bn in 2011-12. Furthermore, 1,006 requests for tax information were made to EU authorities in 2017. This resulted in the recovery of £5 million. In comparison, similar requests in 2013 yielded just £800,000.

Read More

Expats expected to seek HMRC QROPS transfers amid Brexit uncertainty

There is a feeling among some financial advisors that expats should be rushing to ensure their pensions are switched to a recognised HMRC QROPS (Qualifying Recognised Overseas Pension Scheme) before Britain begins to formalise its exit from the EU.

Of course, it is natural that expats should look to make their wealth management decisions, including the possibility of a valid HMRC QROPS, at a relatively early stage so that they can have confidence and clarity regarding their financial arrangements; however, it is also worth remembering that the new British Prime Minister, Theresa May, has said that she does not intend to invoke Article 50 this year, meaning that there is still plenty of time to receive the right financial advice and to make a prudent decision

Read More

Select your country

Please select your country of residence so we can provide you with the most relevant information:

You are currently viewing the Blacktower Financial Management EU website.

You may be looking for the Blacktower United States website.

Blacktower United States > X Stay on this site

Or choose your country.