Mortgages in Portugal: A Guide
Why baydonhill international mortgages?
  • Unique market knowledge
  • Multilingual team
  • Established relationships with banks
  • Proven track record of success
  • Personal attention

A step by step guide to buying a house in Portugal with a Portuguese Mortgage

  1. Find out how much you are eligible to borrow by completing our quotation request form
  2. Instruct Baydonhill International Mortgages to apply for the mortgage on your behalf
  3. Go to Portugal and find a suitable property
  4. Obtain a Fiscal Number (No. de contribuiente) & open a Portuguese bank account
  5. While in Portugal, sign a sales agreement (Contrato de Promessa de Compra e Venda) & transfer the deposit with Baydonhill Foreign Exchange to secure the property
  6. Lender instructs valuation
  7. Arrange buildings insurance.  This can be provided by Baydonhill Insurance
  8. Lender issues a mortgage offer.  The bank or Lawyer registers the deeds at the Land Registry
  9. Arrange monthly mortgage payments with Baydonhill International Payment Plan
  10. Completion

Types of mortgage

Mortgages can be obtained for the purchase of new or existing properties and properties on leaseback schemes.

Portuguese lenders will consider applications in the name of a Company.  This is not widely available and will be at the lender’s discretion.

For construction loans, plans must be provided at the time of application. Funds will be released by the lender in accordance with the plans and following the bank’s valuation to ensure the agreed stage has been reached.

Capital raising is available on your property in Portugal and the amount you can borrow will be determined by a valuation arranged by the lender.

Remortgaging is available.  However, this will incur costs both at the Notary’s office and with the new lender.  We recommend that you check with your existing lender if any penalties will be payable for cancelling your existing mortgage and corresponding land registry deed.

Mortgage products

Products are available on an interest-only or repayment basis. Terms can be from 10 to 30 years however loans must be repaid by 80 years of age.

 

Timeframe

An ‘Agreement in Principle’ can be obtained from a lender once all the requested documentation has been submitted. This takes approximately 2 weeks.

A minimum of 6 weeks should be allowed from application to completion.

Documentation required

  1.  Proof of identity & residence
  2. Proof of income & outgoings
  3. Bank statements
  4. Property details
  5. Full Credit Report and Credit Score

Life assurance

Life assurance is strongly recommended but not always required.

Buildings insurance

Buildings Insurance is mandatory and will need to be in place for completion. The lender will require proof that the policy has been assigned to them. Baydonhill's insurance division can provide you with a quote for this.

Organising payment of your Portuguese Mortgage

Please be aware that missing a monthly mortgage payment may have serious consequences and we therefore strongly advise participation in our overseas payment plan. This service gives you peace of mind in the knowledge that your Portuguese mortgage repayments will be met automatically each month.

Bank account

All lenders will require you to have an account open with them. Baydonhill International Mortgages can assist you with this at no additional cost, if required.

Completion

Mortgage funds will be released by the lender to your Notary for completion of the purchase.

Eligibility & criteria

All mortgages are in Euros and will be secured on your Portuguese property. Mortgages are full status and proof of income and outgoings will be required. 

The maximum loan to value available is 80% of the valuation, excluding all fees.  Our minimum loan amount is €75,000.

Portuguese lenders assess eligibility on the applicant's capacity to repay the loan.  As a guideline, your existing monthly outgoings and the repayment on your Portuguese mortgage should not exceed 35% of your net monthly income.  A percentage of rental and investment income can also be considered.  Mortgage, rent, personal loans and maintenance commitments are considered as outgoings.

Costs of setting up a Portuguese Mortgage

Bank’s arrangement fee – this can be in the form of an application fee and a cost on completion, and varies from lender to lender.  We would recommend you allow a minimum of €175 and up to a maximum of 1% of the loan amount to cover this.

Notary fees and taxes - payable at approximately 10%.  If you take out a Portuguese mortgage a further cost will be passed on to you by your lender for registering the charge of the lender with the land registry.

Valuations – these are carried out by the lenders and payable by the borrower.  The valuation fee is approximately €175 but does vary from lender to lender.

Baydonhill International Mortgages charges a non-refundable application fee of  £200.  A further fee may be payable upon completion of the mortgage.  Please refer to your personalised quotation for confirmation.

We recommend that professional legal & tax advice should be sought to protect your own interests.