What you need to know about mortgages in Portugal

If you’re a non-resident looking to buy a house in Portugal, the good news is that there are no restrictions on the property you can buy, and there is the option to purchase a property using a mortgage.

If you’re not able to buy a house without a mortgage, that doesn’t rule you out of buying a property in Portugal.

There’s just a few things you need to consider first.

When to apply for your mortgage

Mortgages in Portugal are fairly straightforward to arrange.

Having said that it’s worth investigating what kind of mortgage you can get and what payment terms are available before you do anything else.

Firstly, it will give you a better idea what budget you have to work with - which makes your property search much easier - and it will also help avoid any delays later down the line.

Plus, by arranging a mortgage early, you won’t risk having to accept a worse repayment deal towards the end if you’re rushing to secure finance for a purchase.

Are Portuguese banks willing to lend to foreign nationals?

Yes they are.

As we’ve mentioned, Portugal is one of the most welcoming countries when it comes to attracting foreign investment into the property market and most if not all banks are able to offer affordable rates to foreign nationals.

This is despite all the economic uncertainty that has happened around COVID-19.

Depending on your lender, you can usually secure loan terms upto 40 years as a non-resident. Some lenders also have a cap on the maximum age of a borrower which is usually 80.

However, it’s possible to get a mortgage as a retiree from some lenders if you’re in receipt of regular pension payments.

How much can I borrow as a non-resident?

This will depend on the lender and the terms they’re willing to offer.

But you should be aware that most lenders have a cap on mortgage offers to non-residents at 80% of the property value, meaning you could need a deposit of upto 20% to secure a purchase.

A mortgage in Portugal can also be subject to stricter affordability rules and any rent you earn from the property (if you’re purchasing as an investment) won’t be taken into account when assessing affordability - so that’s something to keep in mind.

What type of mortgages in Portugal are available?

The types of mortgages you can get access to in Portugal are roughly the same as those available in the UK.

One thing to note though, is that if you’re buying a property to rent out as an investment, there is no buy-to-let equivalent in Portugal.

Most lenders will offer you a fixed rate or variable rate mortgage.

You’d need to take some financial advice on which is best for you based on your situation, particularly if you’re a non-resident and don’t closely follow Portuguese banking trends.

It’s also worth noting that most lenders in Portugal only offer repayment type loans, and you won’t be able to get access to interest only loans like those available in the UK.

What documents do I need to get a mortgage in Portugal?

If you’re applying for a mortgage in Portugal as a non-resident, you’ll need to provide some or all of these documents before you can secure any finance:

Passport & proof of address: These are standard part of proving your ID and eligibility for a mortgage loan

Recent bank statements, pay slips, tax return, credit report: These will all be used by potential lenders to judge whether you can afford the mortgage at the level you’re applying for

Portuguese tax number: You can’t apply for a mortgage in Portugal without this tax number so you’ll need to apply for it at the earliest opportunity to avoid any delays. A solicitor will be able to help you with this, but you can arrange it yourself.

Looking for your dream home in Portugal?

If you’re ready to take the step and start looking for your dream home or investment opportunity in Portugal, we have a full team of experts who can help you find your ideal property.

We’ll help you find your dream home and can help guide you through the process of securing a mortgage and finance to get you ready to go smoothly.

Get in touch