Mortgages in Portugal

Basic Mortgage Facts

Max 80% loan to value

Max term 30 years

€50,000 minimum loan

Rates from 3.35%

Portugal’s picture postcard scenery, azure seas, Mediterranean climate and welcoming people endear those looking for a more relaxed pace of life. Home to some of the world’s most prestigious golf developments and brimming with other top class sporting facilities, the country offers numerous opportunities to unwind and play.

The financial crisis of 2007 left the Portuguese economy reeling and property prices collapsed by more than 30%. Fast forward to 2015, however, and the outlook is much more positive. According to figures from the Portuguese Real Estate Agents Association (PREA), residential property prices increased nationally in 2014. And a Royal Institution of Chartered Surveyors (RICS) survey in January 2015 shows that, for the first time in five years, buyer demand in the sales market is increasing and showing signs of accelerating.

Prices, however, are still generally below pre-recession levels, so investors, feeling more confident about the future and buoyed by the growing strength of the pound, are coming back to the market. Foreign buyers, in fact, accounted for more than one in five sales last year, and it’s Britons who are leading the charge, followed by the Chinese and French.

Lending conditions continue to improve, and the reduced cost of funding together with continued interest from Portuguese lenders to assist foreigners to buy property means that many deals are becoming cheaper. Rates now start at 3.35% for a variable rate of up to 30% loan to value and 3.4% for a variable rate of up to 60% loan to value.

The Portuguese property market has also been boosted by the success of the Golden Visa scheme, which was launched in 2012 and grants residency status to non-EU citizens who purchase property worth more than €500,000.

As always, it’s imperative to take professional advice before making any decisions. Prospective buyers should always go through the same process that they would follow if they were buying a property in the UK, and this includes consulting a good independent lawyer, and ensuring that an independent valuation of the property takes place, even if it’s a cash purchase. There’s nothing to be gained, and everything to lose, by cutting corners and taking unnecessary risks.

One of the most effective ways of obtaining a mortgage for a property purchase in Portugal is to use a specialist broker in the UK. They’ll know the exact mortgage application requirements and can source the best possible deal. It can also put buyers in touch with specialists in Portugal, to ensure that they comply fully with planning and legal conditions, and can also assist with currency exchange.

*Portuguese Real Estate Agents Association (PREA)