International Mortgage
To understand the financial crises that the world has been going through you need to understand what money is, so I start there. This is complicated by the fact that banks lending in Portugal do not always offer the same conditions to clients, even if they have similar profiles. A better option is to use a mortgage broker, who is used to dealing with this type of transaction, knows exactly which banks and branches to ask, and can probably secure you a better rate.
The Euribor rate is set by a panel of European banks on a daily basis and is generally an indicator as to what rate European banks will lend to each other. The average fees & taxes applicable to a property sale are usually between 5-8% depending on the purchase price.
Like any mortgage application, it can be a very time-consuming and laborious process, so it's crucial that you provide all the most up-to-date documents at once to avoid delaying the process. This is a tricky type of mortgage to commit to as with all the financial uncertainty at present the interest rates could fluctuate quite dramatically.
Luxury properties in Portugal are often owned by overseas companies (such as Malta or Delaware) and the buyers will purchase the shares of said company. In July, the Bank of Portugal's new rules came into force, creating restrictions on the concession of new housing and consumer loans.
You should allow a minimum of six to eight weeks for the mortgage process, but sometimes there can be delays that are outside the lender's or mortgage broker's control. Generally speaking, banks will offer up until 60-70% of the property purchase price (or valuation if lower) for these types of mortgages.
Available up to 60% of the property purchase price with rates from Euribor + 2.1%. In Portugal, they can account for up to 10% of the property price, so you need to ensure you can handle those as well as the required deposit out of your cash reserves. For example, global banking giant Santander has a Portuguese operation, offering many of the same accounts and deals that you can get elsewhere in the world.
Finance is available for the purchase of property in Portugal. Caixa offers access to acquisition and financing of housing properties from Partners with competitive price and mortgage conditions. By using ComparaJá.pt you can access a whole range of mortgage offers in the Portuguese market.
If you're a tax resident in Portugal you may be eligible for IMI (Council Tax) exemption if your property's rateable value is less than € 236.250. For Portuguese nationals residing overseas it is possible to go up to 85% of the purchase price but they must be in possession of either a Portuguese passport or a Portuguese identity card.
A viable option to take into consideration when buying a property in the Algarve is a Portuguese mortgage. Portugal Bank Lending Rate - values, historical data and charts - was last updated on July of 2020. Fixed rate mortgages are available from some lenders and the fixed rate period can range from one to 30 years.
Although things can often change quite dramatically over the period of a mortgage, it is worthwhile noting that Interests rates on the European Continent are typically lower than in the UK. The problem is that the low interest rates are starting to attract a lot of buy-to-let investors, who are finding that the UK market has begun to mature.
A typical fixed rate for a 5-year term could be 2.5%, depending on the bank. In Portugal Banco Santander Totta operates as a universal bank, offering retail, private, Investment Property Portugal corporate and investment banking products and services. Remortgaging is possible in Portugal but the rates are higher and there is more scrutiny in the process.
What is true is that the number of banks that still offer mortgages to non residents have been reduces by about half. The Portuguese banks have struggled for funding in recent years and so are only approving very strong cases. Portugal Realty is a leading Portuguese real estate agent specialising in properties for sale in Portugal.
