Guide To Portugese Mortgages

Portugal is one of Europe's most exclusive holiday, retirement and leisure destinations. Portuguese banks have strict affordability criteria which means that, including the mortgage you are applying for, the total of all debt service payments you have to make (inculding your UK mortgage and any other personal loans you have in the UK or elsewhere) cannot be more than 35% of your net income.

According to the BdP's latest figures for loans and bank deposits, Portugal's banks issued 810 million euros worth of residential mortgages to households, down from €919 million in July - which was already a decrease from the month before - but still quite a bit more than the €709 million granted in August 2017.

One of the key problems is that the financial institutions will not release what their real position is. The same thing is true of situations here in the US. Banks are allowed to carry items on their balance sheets that do NOT have to have the true value posted.

With banks in Portugal now adopting greater caution following the recent Portugal property crash, most lenders now only offer home loans on a repayment basis - including both interest and payment towards the capital loan amount - with borrowing rates starting from around 6%. However, there are still some interest-only deals available.

Warm and sunny translates into: GDP rising (growth); low interest rates on public and private debt; low inflation; easy access to credit for businesses and private mortgages; tax rates going down; falling unemployment; stock market share prices rising ('bull' market).

Ideal if you have other financial commitments and want to keep monthly costs at a minimum, 70% of your loan reduces on a monthly basis, 30% of your loan will be repaid at the end of your chosen repayment term, no capital repayments required on 30% of your loan, you can use other investments to repay 30% of your property at maturity of the loan, maximum term 15 years, loan to be repaid by age 65, ability to make over payments.

Bulgaria can in many ways be compared to Mediterranean destinations such as Spain, Greece and Portugal, yet it is still in the early phases of development and its property prices are therefore still only about a quarter of what you would expect to pay in a country like Spain.

The biggest banks in the country of Portugal have halted all repayment of loans worth 19 billion euros for six months, this is to help those people that have been greatly affected by the Corona Pandemic in the country and if extended further this will lead to a rise in the number of bad debts said the CEO.

Financing example for a Variable Rate Mortgage, for a total amount of €100,000.00, a purchase price of €150,000.00 and a mortgage term of 360 months, corresponding to 360 monthly repayments of €339.63. Loan indexed to Euribor for 6 months (-0.365%), in force in April 2020, plus a spread of 1.750%, resulting in a variable Nominal Annual Percentage Rate of 1.385%, rounded to the thousandth.

Mortgage lenders in Portugal have generally been averse to following the negative Euribor rate, with interest rates for prime borrowers hovering between 3.25 percent and 5.25 percent, depending on the specifics of the loan, although lower mortgage rates may be offered in certain situations.

For now, these rules are recommendations - although banks that do not comply have to explain why they have lent over the new limit but in May the governor of the Bank of Portugal, investment property Portugal Carlos Costa, (pictured, hard at work) stated to parliament that if banks do not respect the lending limits, he will turn his recommendations into binding orders.

As a direct result of all of these cumulative issues, even captive lenders are balking on maintaining floor plan credit lines or real estate mortgages. The interest rate margin (spread) will be confirmed on the day the mortgage is approved and will be fixed for the term of the loan.