international mortgages

portugal

Essential information for buying properties in Portugal

Buying property abroad is not necessarily the same as buying in the UK, there is other essential information you need to be aware of both before and during your property purchase.

It is of paramount importance to seek independent advice from an overseas solicitor.

You need to ensure that you will have full title to the property on completion and that you have the appropriate documents available for the lender. Other documents such as the official plans of the property, a plan of the site and a copy of the caderneta predial, fiscal numbers and certidao de encargos may be required before the lender is able to carry out a valuation. These documents are usually available from your solicitor

You should check with the estate agent and/or your lawyer that you are aware of the costs charged by legal and Government authorities for buying a Portuguese property e.g. SISA Tax is normally charged on the ‘Declared Price’. The solicitor may be incorporating costs for assigning the mortgage within his charges, along with the title deeds to the land registry. You should establish the actual cost of these before proceeding with a loan application. The lender will also have their own legal costs for assigning the loan, the cost of which they will normally advise you when they issue the mortgage offer. These associated fees/taxes are typically between 10% - 15% of the properties purchase price.

Before signing the sales contract, the bank will require a copy of this document to be forwarded with the relevantapplication form. However you are able to sign this contract with the clause “subject to mortgage finance” as the contract, once signed is legally binding, and you may have to forfeit any deposit monies paid.

Banks will require a Habitation licence before financing the final instalments of staged payments on the property.

Properties can be purchased in either individual or joint names or in the name of an offshore company (with personal guarantees).

Eligibility and criteria

We typically arrange loans in Euros; however mortgages are also available in US Dollars or Sterling.
Repayment and Interest only loans are available for purchases.
The maximum loan to value for a purchase is 80%.
The maximum loan to value for a remortgage is 70%.
The maximum term of any mortgage is 30 years (to age 80 maximum) however this varies depending on the type of loan.
The minimum loan amount is €30,000 with no maximum
Mortgages can also be obtained for land purchase and stage payments where the relevant planning permissions/building licenses have been obtained.

Affordability

To qualify for a mortgage in Portugal, a calculation is used to establish whether you can afford to maintain the mortgage repayments. This will automatically happen when you complete our enquiry form, and we won’t charge you for this service.

Your existing liabilities, including your UK mortgage or rental payments, loans, credit card payments and maintenance are taken into account, together with the proposed Portuguese mortgage payments. All this must not typically exceed 40% of your joint monthly net income. For example if your joint net income is £2500, 40% of this equates to £1,000. If your only liability is your current UK mortgage payment of say £300 per month, this would leave a balance of £700 for your Portuguese mortgage repayment.

The amount that you can borrow is also restricted by the maximum loan to value as mentioned under Eligibility and criteria.

Proof of income requirements

If you are employed:

Your last three month’s payslips
Your latest P60 and an employers reference
Your last six month’s personal bank statements

If you are self-employed:

Your last 2-3 year’s audited accounts & last 2-3 years tax returns.
Your last 3 -6 month’s personal and business bank statements

Other documents will be required and will be confirmed when application forms are sent to you.

If you would like to speak with a representative to discuss your requirements please call +(34) 677 874 948

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