The Lakhani Group
Since interest rates are low, financing the purchase of a property through a national bank loan could be an interesting option, especially because since 2010, Portuguese banks have not been lending as much as they are now. 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.
Persons who are not residents of Portugal need to pay taxes only on income earned at that country, for instance, interest paid on deposits or savings in Portuguese banks. A couple of banks in France say they'll do mortgages for nonresidents, but the requirements are so strict that precious few non-France residents would qualify.
Most Portuguese banks offer different types of mortgage repayment options on either a fixed or a variable interest rate. We will be able to show you the most important factors regarding your mortgage: from interest rates, to commissions and taxes. Interest-only mortgages are usually only offered for new constructions, and typically only for a two-year term.
You should always go through the same process that you would follow if you were buying a property in the UK. Take independent advice from an English-speaking lawyer who is not connected to your seller, estate agent or property developer. In fact, since we can get a loan for 100% of the purchase price, let's get a bigger house than we actually need and count on a huge appreciation.
For those wishing to build their own homes, banks do offer construction mortgages. Calculate your monthly payments for a particular example loan amount and interest rate using this Portuguese mortgage calculator. The early redemption penalty during the fixed-rate period is 2% as per the regulation of the Bank of Portugal.
You can go directly to lenders in Portugal, but each one has different criteria and you may not necessarily be offered the most suitable loan, or the best deal available. Rules that prohibit banks from advancing loans that require 50% of more of a person's income to service, come into force on July 1st.
Alternatively, fixed rates are available at 4.1% for up to 5 years based on loan to value ratios of up to 70%. Whether you are looking to own a home or a business in the sun, the mortgage requirements in Portugal are similar to the process in France or Spain - and the property prices can be competitive.
Our solution: a mortgage of 375.000 € on the property plus a Lombard loan of 100.000 € on their pension pot. In Portugal the vast majority of mortgages are variable rate, however, fixed rates are becoming more popular. Choose from a range of UK mortgages with the on-going support of our mortgage advisers, who'll support you through the process of buying a property.
The maximum mortgage term available is 30 years and the maximum age for getting a mortgage in Portugal is 80 years. Property in the Algarve are available up to 80% loan to value (LTV) with a few banks, with the majority at 75% LTV. It's sensible to get the mortgage process started as early as possible, even if you've not begun to look at properties.
