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By Simon Conn | Mortgage Advisor

Updated: 15th June 2020*

With its enviable climate and lifestyle and easy transport links to the UK, Portugal is a prime location for those seeking a property abroad. Whether you are looking to own a home or a business in the sun, the mortgage requirements in Portugal are similar to the process in France or Spain – and the property prices can be competitive.

In this article we’ll give you guidance on getting your Portugal mortgage:

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Can I get a mortgage in Portugal?

The answer is yes! Portuguese mortgage lenders offer opportunities for foreigners to secure a mortgage loan. But before you shoot off to the next Portuguese bank, there are a number of things you should know.

When it comes to mortgage rates, Portugal bases them on the Euro Interbank Offered Rate (Euribor), plus a margin typically between 1.50% and 2.50%. This means you may not get your most favourable mortgage interest rate.

There is also a likelihood that going direct to a Portuguese mortgage lender for your overseas property will mean having to take the bank’s own or recommended home and life insurance, which could heap on additional costs.

How do I get a good mortgage rate in Portugal?

To avoid paying higher than expected mortgage fees, it’s best to work through a mortgage broker. In many cases this can reduce that extra interest margin quite significantly, with some brokers able to find Portugal mortgage deals as low as the Euribor rate plus 1.00%. Most Portuguese mortgages are taken out over 25-30 years, so a better rate could save you many thousands of pounds over the long term.

If you’d like to get help from a mortgage broker, get in touch on 0808 189 2301 or make an enquiry. It’s worth talking to an expert at your earliest opportunity.

Mortgage requirements in Portugal

You may be wondering whether it’s easy to get a mortgage in Portugal, and how overseas mortgages work. As with mortgages in the UK, the type of mortgage you are eligible for will depend on your situation and how you intend to use the property.

In terms of the income you’ll be required to demonstrate, bear in mind that mortgage requirements in Portugal are based on affordability rather than multiples of your income, as is the common practice in the UK.

As a general rule of thumb, this is based on the Portuguese mortgage lenders’ assumption that you can afford 30% of your income after tax to spend on repaying any outstanding debts such as loans, credit cards and existing UK mortgages. So do bear in mind that mortgages for foreigners in Portugal take all of your UK debts and regular monthly repayments into account. The simple table below shows how this works in practice.

Mortgage criteria in Portugal

Net Monthly Income30% of Net Income CriteriaMinus Existing UK Mortgage RepaymentsAmount Available for Portugal Mortage Repayment
£3,000£900£450£450

However, while 30% of your net monthly income minus any existing debt repayments is the normal measure of affordability, the brokers we work with may be able to find you a Portugal mortgage based on 30-35% of your net income.

Portuguese lenders also include with an affordability calculation a monthly amount to cover both their in-house building insurance and life assurance (where required).

Portugal mortgages for non-residents

The Portuguese government does encourage foreign investment in property, so there aren’t any restrictions on non-EU residents looking to purchase property in Portugal. However, if you aren’t going to be a full-time expat residing in your Portugal property, most banks will only provide a loan up to 70-80% of the purchase price.

However, for people planning on residing in Portugal, mortgages of 80% or even 90% of the purchase price could be available.

Buy to let mortgages in Portugal

It is possible to get a buy to let mortgage in Portugal, though do bear in mind that it is not without risk. Traditionally, rental yields are not always high and Portuguese law is generally considered to provide extensive protection for tenants’ rights, rather than those of landlords.

Some may require larger deposits of up to 40% whilst others will require your income to be sufficient enough that you are able to afford your Portuguese BTL mortgage without rental income, should you be unable to find tenants.

Make an enquiry if you’d like help in deciding whether a buy to let mortgage in Portugal is right for you.

Commercial Mortgages in Portugal

You will need to provide a deposit of at least 50% of the property purchase price in order to secure a commercial mortgage in Portugal.

If you plan on running a business from the property yourself, most commercial mortgages in Portugal will require a viable business plan, not to mention proof of your experience in a relevant business.

After all, if you have been a successful restaurateur in the UK, for example, you have a better chance of keeping up the repayments on your restaurant’s commercial mortgage, and many lenders will take that into account when making a decision.

How to find the right mortgage broker

It goes without saying that every country has its own unique ways of doing things – not to mention its pitfalls for the unwary – and you need to be dealing with an expert who can guide you to the right Portuguese mortgages for your individual needs. It’s incredibly important you get expert advice from brokers who understand the overseas Portuguese mortgage market.

The experts we work with understand the mortgage landscape in Portugal, so they know just the right lenders to go to for any type of mortgage in Portugal. That’s part of the reason why we’re regularly rated as five stars on Feefo, and why Portugal mortgages are a popular topic with our customers.

Speak to a Portuguese mortgage expert today!

Taking out a mortgage on a property in Portugal is a big decision. So if you still have unanswered questions about how to get a mortgage in Portugal and would like to speak to an expert, call us on 0808 189 2301 or send us an enquiry.

You can then relax while we find a Portugal mortgage broker who offers all of the expertise you need. You can also rest assured that we won’t ever charge you a fee or conduct a search that leaves a footprint on your hard-won credit rating.

Updated: 15th June 2020
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FCA disclaimer

*Based on our research, the content contained in this article is accurate as of most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The info on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs. Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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