There are a variety of ways that you can pay for a property in Portugal. As well as paying cash, you can fund your property through a variety of loan options; these should be considered before you start to look for a property or select an estate agent to assist you in your purchase. In Portugal, your options for home loans, particularly as a non-resident owner, are unlikely to be as extensive as those on offer if buying in your resident country. Lending conditions have also become particularly more stringent since the financial crisis.
Mortgage offers change on a daily basis, so it’s best to contact us as overseas mortgage broker to determine what the current offers are. You will also need an understanding of how much cash (your deposit) is needed in relation to the mortgage amount. Currently, as a non-Portuguese national you will be asked for a deposit of between 20-40 %, depending on the type of loan and the borrower’s circumstances.
When applying for your mortgage you will need to provide proof of income and identity, and details of your bank account and credit cards.
You will need to ensure you have a full understanding of interest rates, loan terms and the typical criteria used to determine loan-to-value amounts. Both interest-only and repayment mortgages can be arranged in Portugal, on a variable or fixed-rate basis, or a combination of both. Terms will usually be from 10 to 30 years, although loans must be repaid by the age of 80.
Whatever way you decide to go, always make sure that you have included any mortgage fees into your proposed budget. Choosing the wrong budget could lead to difficulties and it’s really important that you don’t stretch yourself financially.
What is the biggest financial mistake made by those buying property in Portugal ?
The biggest mistake you can make is failing to realise the impact of exchange rates on your final purchase price. When you agree to buy a property in euros, you are agreeing without knowing the exact price in dollars or sterling– although of course you may already have enough euros in Portugal to pay for it. The exchange rate you receive when you transfer your money into euros will directly impact the final cost of your property – you can either save or lose a lot of money throughout this often-overlooked process.
The price of currency fluctuates second by second as it gets traded on the currency market. As a ‘live’ market, the exchange rate you can achieve in the morning will be different by the afternoon. Over the course of days, weeks and months, exchange rates fluctuate, sometimes drastically.
What many overseas property buyers don’t realise is that they can ‘fix’ an exchange rate today for a purchase later – effectively ‘fixing’ the purchase price of their Portuguese property in pounds, as well as euros.
We advise that as soon as you know that you’re going to purchase a Portuguese property, contact us to help you save money to fix the price of your property in pounds as well as euros! With our currency exchange partner we help overseas property buyers save money and avoid currency fluctuations and risks. As we focus on finding your new home, money transfers for property, as well as people emigrating, the entire process is efficient, easy and very cost effective.