Mortgage advice when buying property in Portugal
Most people looking at buying a second home abroad usually consider financing or mortgaging a percentage of the property purchase.
Many use their local banks and lenders by securing the financing against their own residence at home. However there are some advantages to raising the finance in Portugal and using the property here as collateral.
Since the beginning of 2015 there has been a much needed re-launch of local banks seeking loans for non resident clients. In fact at present they are actively pursuing larger agencies such as ourselves in a bid to reintroduce themselves and their willingness to provide loans to our clients, with some very attractive deals.
The loan options are relatively standard at this time and as such it isn't an overly complicated chore deciding which bank or lender to use.
Terms can be for up to 35 years, with interest rates ranging from 2% - 7%. The higher loan amount (Loan To Value) the higher the rate will be. Maximum advertised LTV's are 80%, however for a non resident it's more realistically 60%-70%.
The criteria for borrowing money is generally gauged against your incomings & outgoings, with a percentage being used to determine how much you can afford to repay.
For example: if you have incomings of €2,000 per month, outgoings of €1,000, your net income would therefore be €1,000. Banks will then apply their "affordability" percentage, which can be up to 40%, which allows you a repayment figure of €400 per month (40% of net income of €1,000).
Special Mortgage Offers for bank owned properties
At present the best interest rates and highest LTV deals are only available when purchasing a bank owned or financed property. In these cases the banks are more willing to lend and will offer rates from 2% - 3%, and will offer up to 100% financing (again this is not generally possible for Non Residents 80% is a good rule to work with). These types of deals have been particularly popular with investors as it allows a lower cash outlay and low monthly outgoings. If this is something you are interested please let us know as we currently work with all the banks and have access to all qualifying properties.
A mortgage approval will generally be valid for 60 days, and is relatively easy to obtain from any number of banks. The approval may be extended after this time, but new documentation will be required. Also, most lenders will charge a small fee for the approval.
In most instances our finance department can analyse your application and provide you with an accurate loan simulation including your borrowing capacity. All our financial services are provided without any charge to our clients'.