Mortgages in Portugal
Portuguese bank procedures of Mortgages in Portugal are different from those in other countries. We can offer you our expert guidance on the process of applying for a mortgage in Portugal. There are also exclusive conditions with rates not offered publicly that we can also explain to you.
PRIMARY RESIDENCE MORTGAGES
Primary residence mortgages are for those people purchasing a property that will become their main residence. This type of mortgage is also for those people who pay their income tax in Portugal. For those people about to start paying taxes in Portugal you may also apply for this type of mortgage. With the primary residence mortgage it is also possible to secure up to 80% of the property purchase price.
HOLIDAY HOME MORTGAGES
Holiday home mortgages are for those non-resident property buyers who do not live in Portugal. The maximum borrowing amount on the holiday home mortgage is also up to 70% of the property purchase price. Lenders for the holiday home mortgages can also offer fixed variables and in some cases mixed rates. For variable rate mortgages the rates are based on the annual Euribor rate with a percentage margin added to this.
Investment mortgages are for property buyers who plan on renting out their property after their purchase. This mortgage also applies to a buyer who already has at least one existing mortgage in Portugal. If the banks believe that the property will not be for use by the owner, they would then treat this property as an investment mortgage. For these types of mortgages, banks will only offer 50-60% of the property purchase price.
We can also help to put together a back-to-back loan arrangement secured against your listed investments. This is where the lender takes over as custodian, or where a guarantee is provided by the existing custodian of the assets.
For the construction mortgage, the banks will offer a loan of up to 50% against the plot of land. With this type of mortgage they can also loan up to 70% of the cost for the construction works.
Before applying for the construction mortgage the applicant must own the plot of land outright before any bank will lend against the land. It is also possible to purchase the land and at the same time you can sign for the mortgage. The banks will usually pay up to 50% of the cost of the plot as the first installment but usually only once the works have started.
All paperwork related to the construction project must be presented at the start of the formal mortgage application process. The paperwork needed will be the architect’s plans for the project which must be stamped by the College of Architects. Also needed is the building license, and detailed quotes from the construction companies that will carry out the works. An evaluator will assess the project and the banks will base their lending on this report.
Through the years we have arranged many construction mortgages and can offer you our expert advice on the process at hand.
A commercial mortgage is for those looking to purchase a commercial premises. A commercial property differs from a residential property so the mortgages available are generally 50-60% of the purchase price.
Some banks will allow the purchase of a commercial property through a newly formed Portuguese limited company if it is set up as a shell company. This means the purchase is for the sole purpose of buying the property and the company will not actively trade after the purchase. This type of mortgage makes additional work for the banks in assessing companies making them more reluctant to approve this type of mortgage. Usually a bank will only look at these cases when the companies or individuals behind them have strong profiles.