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If your property purchase in
Portugal is to be funded by a mortgage it is wise to speak to
lenders here in Portugal. Portugal currently has lower interest
rates than the majority of other European countries.
Although there are many
companies and banks in Britain (and world-wide) offering
competitive rates for overseas mortgages sometimes a
Portuguese bank can offer better terms and conditions as
well as repayments for the overseas buyer.
Mortgages in Portugal can be acquired for purchasing,
renovation or construction. All mortgages in Portugal
are secured on the property not the person.
Most Portuguese banks
will ask for the 'purchasers' to supply 20% of the
purchase price. If you are considering a mortgage with a
Portuguese bank you will have to factor in
solicitor/lawyer's fees and a valuation fee of the
property, which is carried out by the bank before
confirmation of a mortgage. This fee varies from bank to
bank and can be up to 500€.
Most
Portuguese banks have a minimum mortgage threshold,
which is usually set at 30,000€. Anything below this
threshold is considered a 'personal loan'. The most
common mortgage available in Portugal is the repayment
mortgage and these can be taken over 5-20 year terms.
However in recent years banks have been offering
mortgages over longer terms. Mortgages usually have to
be fully repaid by the age of 65. Life insurance on all
mortgages in Portugal is mandatory.
Portuguese lenders assess eligibility for a loan on the applicant's
ability to service the loan and not potential rental income from the
property. The general guideline is as follows: of an applicant's net
income 35% should cover existing outgoings and the monthly repayment
on the Portuguese loan.
If you are self-employed income is assessed
as the average of the last three years' net income. Rental and
investment income will also be considered. If employed a lender will
base your income on your payslips and the amount that is credited to
your account monthly. Outgoings considered are liabilities such as
mortgage/rent in the UK, personal loans & maintenance commitment.
For example - If
you have a net monthly income of £2000 with a UK mortgage of £500
and no other outgoings. Taking into account 35% of the income, that
is £700, a borrowing with a monthly repayment of £200 could be
considered. To be considered
for a
mortgage in Portugal you need to be able to prove
both your income, expenditure, outstanding financial
commitments as well as providing a comprehensive credit
history before you will be issued with the all important
'Mortgage Approved' status. |
