Getting a mortgage in Portugal

August 28, 2021

There are lots of reasons why you might want to buy property in Portugal, especially to enjoy the sunshine lifestyle of the Algarve at the same time as enormous tax benefits.

A question we are often asked is, ’can I get a mortgage in Portugal?’

Yes you can, but just like at home it pays to shop around between the different Portuguese banks. They will offer fixed or variable rates but be aware that interest only mortgages tend to only be offered for a limited period on new build homes. It is also worth noting that home and life insurance is usually compulsory when you take out a mortgage in Portugal.

The Portuguese government encourages foreign property investment and there are no restrictions for non-residents – provided you have the necessary paperwork to back up your application. You may also be interested to know that mortgages are not restricted to people who are employed or self-employed. If you are retired, you can also get a mortgage in Portugal – as long as you have a regular pension income. In this situation, you can put forward a guarantor, perhaps your working children, which will not only support your application, but could also be beneficial when it comes to inheritance tax if they are put down as part-owners.

You must have a fiscal or tax number in order to carry out a financial transaction in Portugal – this is the first stage in your D7 visa application so we will already have helped you take care of that . Once you have your fiscal number and have chosen your bank, you should find out their required list of documents which will typically include proof of ID, address and residency, proof of income including dividends, rental, pensions and so on as well as bank statements, your existing outgoings and a credit check. 

Once you’ve provided all the documents the bank will arrange an independent valuation of the property you’re buying for mortgage purposes. The most you will be able to lend will be around 70% of the valuation figure but obviously that will depend on your specific circumstances. If you’re buying commercial property such as a restaurant or a shop, the maximum mortgage is usually 50% of the valuation figure. Another way of calculating what you’ll be allowed is that the sum of any existing debts and the new mortgage payments should not exceed 35% of your monthly income after tax.

Hopefully that’s whetted your appetite to start a conversation withy our team so just fill in the form on this page and let’s see how we can make your Algarve lifestyle a reality.

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