How to get a mortgage in Portugal
For those who have a Portuguese Residency Card (Cartão de Residencia), a Portuguese Tax Code (Numero Fiscal de Contribuinte), a Portuguese bank account (Conta Bancaria em Portugal), proof of regular income and/ or contract (Contrato) with an international or national company in Portugal, and a good credit rating it is fairly easy to take out a mortgage.
Most banks offer attractive mortgage packages for legal residents and some have tailor made services aimed at foreigners.
There are no building societies in Portugal but there are building societies in many countries which have departments and offer services for those looking to purchase property in Portugal.
Many Portuguese banks have branches in the main European capitals and the USA such as Paris, London, Rome, Zurich, Miami, New York. These can arrange mortgages in Euros.
Normally, based on their valuation (Avaliação), Portuguese banks will lend between 70% and 90% of the value of the property for Portuguese citizens and legal residents holding a Residency Card, and 60%-70% to non-Portuguese citizens and non-residents. Of course, other factors are taken into account such as income and age of the applicant.
The mortgage company will send out a valuation agent (Calculista de Obra/Superintendente de Vistoria/Avaliador) to assess the value of the property (Avaliar) and the cost of this is included in the charges made by the bank for the mortgage application, which varies according to the purchase price of the property (usually around 1%). Once the mortgage has been applied for, funds will be required to cover the bank charges.
What is necessary to apply for a mortgage in Portugal?
- Proof of sufficient income to meet the mortgage payments
- Life Insurance (Seguro de Vida) to cover the terms of the mortgage
- Valid passport and identity card (Passaporte e Cartão de Identidade)
- Pay slips (or two years' accounts for the self employed) and tax declaration from the country of residence
- Residency card (Cartão de Residencia)
- Bank statements for several months proving receipt of income and loan repayments
- Medical examination (Atestado Médico) for insurance purposes
Working out the price range
It is important to establish the price range you can afford and most banks will offer to work out a simulation (Simulação) based on the price range required and average monthly income. The purchaser also needs to make sure they have enough funds to cover the deposit and legal fees.
There are three possibilities when seeking a mortgage:• Directly from a Portuguese bank - the majority have English-speaking staff and some even have international departments for foreigners. Most of the banks in Portugal have similar lending criteria on the terms of the mortgage, how much they will be prepared to lend, what mortgage products they offer and their arrangement fees
• Use a mortgage broker. The purchaser pays extra but has the added advantage of being advised how much can be borrowed and the best mortgage products to suit individual circumstances. They will save time and hassle with language and culture barriers and provide quotations from the lenders most suitable to the client.