Mortgage Finance Options For Purchasing Property In The Algarve Portugal

If you're buying a property in Portugal , you may be fortunate enough to have found a cheap rural property which you can buy cash down, or you may have funds from sale of a property or business, or an inheritance which you can use to purchase a property without requiring finance. 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.

They are influential in determining the interest rates that have to be paid by governments and companies. Markets also offer investors various sophisticated 'financial instruments'. In many cases leaving this until you've found a property leads to disappointment from either losing the property due to the time to be approved, or not receiving the funding level needed to fulfill the purchase.

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.

A notable issue for tax purposes is that non-residents are taxed only on their Portuguese income. Finance is also available to build or renovate a property and three banks Selling a property in Portugal are currently offering mortgage finance to UK, Delaware or Malta companies to purchase a property, or for the client to purchase a company already owning a property.

The banks in Portugal usually take into consideration the borrower's financial position and the property's valuation when analyzing mortgage approval. Around 75% of people own their own homes in Portugal, which is 10% higher than the average homeownership rates in the UK or USA.

On the other hand, accessibility for mortgage customers (old mortgage loans) is expected to remain stable, as interest rates are not likely to rise substantially over the next two years, he said. Portuguese mortgages can be arranged for acquisition, renovation and construction and the mortgage is secured on the property in Portugal.

Both residents and non-residents can apply for a mortgage from Portuguese banks. Most mortgages can be arranged with terms of 25 years (for non-residents) and 30 years (for residents), usually up to a maximum age of 75. For non-residents, some banks have a maximum 20-year term.

After the fixed rate period expires, the mortgage will automatically convert into a variable rate mortgage (unless the rate is fixed for the entire loan period). Under Portuguese law the pre-payment penalty from all banks is fixed at 0.5% for variable rate loans and 2% for fixed rate.

The interest rates of a Portuguese variable rate mortgage is linked to either the three- or six-month Eurropean Central Bank (Euribor), rate and increased by the margin (profit) that the bank applies. In Portugal, the bank lending rate is the average rate of interest charged on loans by commercial banks to private individuals and companies.