Buying property in Portugal as a resident or foreigner can be an excellent investment opportunity, but it requires a good understanding of the financing process. See below everything you need to know about mortgages on Portuguese soil – based on the AnchorLess guide.
Types of Mortgage Available
| Mortgage Type | Advantages | Attention! |
| Fixed Rate | Predictable payments throughout the term. | Higher initial rates and penalties for early repayment (around 2%). AnchorLess |
| Variable Rate | Lower initial rates. | Risk of increase according to Euribor; lower penalty (~0.5%). AnchorLess |
| Mixed Rate | Initial fixation of 2–5 years, then variable. | Combines initial stability with later flexibility. AnchorLess |
| Interest-Only | Low monthly payments initially. | After the initial period, the instalment increases. Requires financial planning. AnchorLess |
Current Rates
Interest rates in Portugal currently vary between 2.5% and 5.5%, depending on the type of mortgage and the client’s profile. AnchorLess
Criteria and Conditions for Expats
- Residency: Residency is not required to obtain a mortgage. Fiscal residents (more than 183 days a year in Portugal) usually benefit from better conditions. AnchorLess
- LTV (Loan to Value): Residents are generally financed up to 80–90%, requiring a 10–20% deposit. Non-residents are generally up to 60–70%, with deposits of 30–40%. AnchorLess
- Age Limit: Banks require the mortgage to be fully repaid before the borrower reaches 70–80 years of age. AnchorLess
- Repayment Capacity: The monthly instalment should not exceed about 30–35% of net monthly income. AnchorLess
Necessary Documentation
- Identification: Passport or EU citizen card and NIF (Tax Identification Number). AnchorLess
- Residency: Proof of address (water, electricity bill, or bank statement). AnchorLess
- Proof of Income:
- Employed: Pay slips (3–6 months), IRS declaration (income tax return).
- Self-employed: Bank statements, IRS declaration from previous years. AnchorLess
- Property Documentation: Preliminary contract or property data, caderneta predial (property tax registration), energy certificate, among others. AnchorLess
Stages of the Process
- Pre-approval: Preliminary assessment of financing capacity. AnchorLess
- Property Selection and CPCV: Promissory contract with a financing approval clause, protecting the deposit. AnchorLess
- Formal Submission: Presenting all documentation to the bank; a fee is charged (€200–300). AnchorLess
- FINE: The bank issues a sheet with concrete loan conditions (FINE – European Standardised Information Sheet). AnchorLess
- Valuation: The property is valued (€300–600), basing the financed amount. AnchorLess
- Deed and Conclusion: Formalisation through a notary, payment of taxes, insurance, and final deed. AnchorLess
Other Associated Costs (in addition to the deposit)
- IMT (Imposto Municipal sobre Transmissões – Municipal Property Transfer Tax): 2% to 8%, depending on the value.
- Stamp Duty (Imposto de Selo): 0.8%.
- Notary, registration, and deed: ~€1,000–1,500.
- Lawyer: 1% of the property value (~€1,500–2,000).
- Valuation: €300–600.
- Insurance: Life (mandatory) and housing (recommended). AnchorLess
In total, additional costs amount to 7–10% of the property value. AnchorLess
Advantage of Using a Mortgage Broker
- Access to multiple banks and products.
- Assistance with documentation and translation.
- Negotiation of more favourable conditions.
- Remuneration usually comes from the bank, not the buyer. AnchorLess
Practical Advice from Expats
- Patience is essential: The process can take 1 to 3 months. AnchorLess
- Translated and organised documents help greatly. AnchorLess
- Valuation below the agreed price is common. Be prepared for a larger deposit. AnchorLess
- Talk to banks that have departments dedicated to foreigners and English support. AnchorLess
Conclusion
Acquiring property in Portugal is viable for expatriates — despite the bureaucratic and financial challenges — with competitive rates and a relatively open system. Knowing the types of mortgages, requirements, costs, and advantages of professional support is fundamental for a safe and efficient choice.
FA Accounting guides expats through the entire tax process, including document preparation, obtaining the NIF, cost assessment, and financing strategy. If you wish to move forward with a personalised plan, speak to us!
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