Portugal Property Advice: Mortgages
Most people looking to buy a second home will be looking to obtain financing for the majority of the purchase.
Many had used their local banks and lenders in the UK or Ireland, and secured their financing against their own residence at home. However with the current mortgage rates and deals on offer in Portugal, financing locally is almost certainly a better option.
Portugal banks will allow borrowers to finance up to the age of 80 years of age, and have both interest only and repayment options. There are some new exciting options available which combine both, and drastically reduce the payments made allowing for a balloon payment at a later date.
Terms can be for up to 30 years and with rates as low as 3% it is certainly a great time to take advantage of what's on offer.
The criteria for borrowing money is very similar to the Irish and UK systems and is generally gauged against your incomings and 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, and outgoings of €1,000, your net income would be €1,000. Banks will then apply their affordability percentage, which can be up to 40%, which allows you a repayment amount per month of €400 per month. (40% * net income of €1,000).
When a mortgage is required for any purchase, it is vital to obtain this information BEFORE making any commitment on a Portugal Property.
Mortgage Approval
A mortgage approval will generally be valid for up to 6 months and is easy to obtain from any number of banks. Most people will use a specialist mortgage broker for this, as this eliminates any language barriers, doesn’t cost anymore and provides impartial advice and more selection of options.
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