Property Advice: Mortgages
Most people looking at buying a second home will at least be considering financing a percentage of the purchase.
Many use their local banks and lenders in the UL or Ireland and secured their financing against their own residence at home. However there are some advantages to raising the finance in Portugal and using the property here as the security.
There has certainly been a decrease in the number of loans approved in Portugal over the last few years, however this does not detract from the benefits of financing here. As the mortgage situation grew increasingly difficult, Infinito Real decided to open its own finance company (Atlas Overseas Mortgages) to facilitate our clients before making any decisions on a property. We found this service saved our clients a lot of time by providing a guideline on the maximum mortgage that would be possible to achieve along with the repayments.
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 (LTV) 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 very similar to the UK & Ireland systems and is generally gauged against your incomings & out goings, 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, out goings 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% * net income of €1,000).
Special Mortgage Offers
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 low cash outlay and low monthly out goings. 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. In most instances it is easier to work with a Specialist mortgage broker for this, therefore eliminating any language barriers and allowing for multiple approvals to be obtained on your behalf. For any client of ours we offer our services free of charge.