Mortgages in Portugal
There is no doubt financing in Portugal is a lot more difficult than it used to be, but that isn’t necessarily a bad thing. Due to the excessive borrowings of non residents over the past decades.,banks in Portugal, and throughout the world for that matter, have cut down dramatically on lending high loan amounts to non resident buyers in Portugal. This saves the bank from any adverse risk, but it also means it contributes to the down turn in property sales also. Many lenders dropped as low as 50% LTV’s for non residents, which meant buyers sought deals elsewhere.
What IS available?
Many clients often ask how much the banks are lending, well that is hard to answer without having all your documents. There are banks advertising up to 80% LTV on properties, and some banks are even offering up to 100% finance on their own properties. But the high LTV deals are incredibly difficult to get, it requires an income of way above average, little to no debts elsewhere including home mortgages and THEN you have a shot.
I normally advise clients to expect to need around 30% – 40% deposit to be on the safe side.
Should i just finanace at home?
This is a valid option and it is of course easier for self employed buyers who have a relationship with their banks, and also for property owners with high levels of equity available to them. Rates are generally slightly lower in the UK, although not fixed for the duration as they are in Portugal, but for the time being it is a viable option.
Are mortgages in Portugal competitive?
Well, yes they are. The rates are good, for non residents it’s around 5%, the loans can be spread for up to 35 years, and the early payment penalties are nominal. (0.5%). It’s worth remebering that comparing these rates directly with the UK is not a like for like comparison. A resident mortgage that you would get in the UK will be secured on your house and they can reposess it along with payments from you work. As a non resident borrower in Portugal, the bank can not repossess the property easily its expensive and time consuming, and they have no access to you funds and cannot black list you in the UK, so the risk is far greater.
Infinito Real decided a number of years ago that we would supply our clients with financial advise free of charge, as it was becoming more and more difficult and many mortgage brokers closed down due. This service is free for all our clients, our finance company Atlas Overseas Mortgages provides all the relevant assistance you may need.