Your Information Source For Real Estate And Living In Portugal

Mortgage interest rates in the Eurozone are on the rise, putting Britons who have borrowed to buy holiday homes in Spain under increasing financial pressure. So, for example if the applicant(s) income is £3,000 after tax and they have a mortgage of £450 per month in the UK, plus a car loan of £100 per month and the proposed cost of the mortgage in Portugal is £350 per month their debt (£900 per month) to income (£3,000 per month) is 30 per cent, therefore within the guidelines.

Stamp Duty is charged at a fixed rate of 0,8%, whereas Purchase Transfer Tax for villas and apartments is charged according to a sliding scale that is altered each year, varying between 1% and 8% (e.g. 6% over €550.836 for non-permanent habitation) of the declared value of the sale.

Then of course the Investment banks were continuously creating new investment vehicles such as synthetic CDO's which basically were side bets on the subprime mortgage markets that realistically speaking had no tangible value for helping out the markets other than investors betting on the markets.

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.

Foreign banks like Northern Rock, Royal Bank of Scotland (RBS) and Halifax in the UK, banks in Ireland, Iceland and Europe also poured their money in. At last it became clear to many that there was a risk of huge losses should US house prices start to fall and interest rates start to rise.

It includes the initial expenses with compulsory multi-risk home insurance 174.54€ (average annual value), opening fee €520.00 (taxes included), administrative and contract fees €416,00 (taxes included), property valuation fee €221,00 (taxes included), instalment processing fee €1.77 (taxes included), stamp duty on the agreement €600.00, registration fees €240.00, notary fees €153.75 (taxes included), solicitor services €389.48 (taxes included).

There are not too many fundamental differences between a foreign mortgage and a UK based one, but bear in mind that the risks of buying a property are the same as in the UK. In Europe it is not the norm to see Mortgages offered interest only and it is very rare to see buy-to-let mortgages.

The rule of thumb is, the more established the market, then the easier it is, so in emerging markets like Greece, Bulgaria, Poland, The Caribbean and Israel, you can get a mortgage - but the rates will be considerably higher (see below), the amount they will lend is less and they also have stricter borrowing terms.

Due to the company's experience and competitive product range Corporate and Commercial Finance (Anglo Portuguese) Ltd., works closely and is recommended to future non-resident purchasers from numerous Developments, Estate Agents and Lawyers across Portugal and its Islands as a result the Managing Director frequently visits Portugal to hold meetings keeping strong ties with these Developers, Estate Agents, Lawyers and especially the Banks.

You may be interested to know that many of the world's leading banking institutions have offshore and international arms and that because of their global presence the likes of HSBC and HBOS for example all offer international mortgages and specific mortgages and home finance solutions in various countries.

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, Portugal Holiday Home Mortgage 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.

Loan amount must not exceed 80% of the mortgage valuation or purchase price (whichever is lower). You'll discover the key things to watch out for, what you'll need to have to hand and whether buying a property in Portugal is the right option for you. In the established property markets like France, Spain and to a lesser extent Portugal the lenders have become much more flexible when dealing with UK buyers.