Mortgages in Portugal for International Buyers | ACPS

I think a sensible mortgage conversation should happen before you fall in love with a house. A lovely terrace is a good reason to book a viewing. It is less useful as a way of working out your budget.

If you are buying in the Algarve or on the Silver Coast and need finance, I would start by finding out what a lender might consider, how much cash you will need and what the monthly payments could mean for everyday life. Then we can look for properties with a clearer idea of what will work for you.

Can I get a mortgage in Portugal if I live abroad?

International and non-resident buyers can apply for a Portuguese mortgage. Approval is a separate question. The bank will look at your income, regular spending, existing debts, age, proposed loan term and the property itself.

Tell the adviser where you live, where you pay tax and whether you want a permanent home, a holiday home or an investment property. If your income is in pounds, dollars or another currency and your mortgage is in euros, ask how the lender treats that income and what exchange rate changes could mean for your payments.

I would get that conversation started before arranging a full viewing trip. An online calculator is a useful starting point, but it is not a mortgage offer.

Corinne Ferreira and Sublime Mortgage

For the mortgage side, I can put you in touch with Corinne Ferreira, senior mortgage adviser at Sublime Mortgage. Corinne has a background in banking and credit intermediation and specialises in helping non-resident buyers. I would speak to her early, before we plan the viewings, so you have a clearer idea of the budget.

Sublime Mortgage operates through Inspiring Details, Lda, registered with Banco de Portugal under number 0007926 as a tied credit intermediary. It works with partner lenders. You can read more about Corinne and Sublime Mortgage and check the official Banco de Portugal entry.

Sublime’s mortgage brokerage service is free to clients. You will still need to budget for bank charges, insurance and purchase costs. I would ask which lenders a comparison includes, how the intermediary is paid and what costs remain yours. The bank makes the lending decision.

How much deposit and cash will I need?

There is no single deposit percentage I can promise every international buyer. The amount a bank will lend depends on its assessment, your circumstances and the intended use of the property. Regulatory lending limits are ceilings, not a promise that a bank will lend that much.

The loan-to-value calculation uses the lower of the purchase price and the bank’s valuation. If the valuation comes in below the agreed price, you may need more of your own money. Ask the adviser to work through that possibility before you commit.

You also need funds for purchase taxes, legal work, registration, any bank and valuation charges, and the insurance required by the lender. Our Portugal property taxes and buying costs guide explains the wider budget. I would leave some room for moving in and getting the house comfortable, too.

What documents will the bank ask for?

Ask for a checklist for your circumstances rather than assuming the documents you used for a mortgage at home will be enough. Common requests include:

• Passport or other accepted identification, Portuguese tax number (NIF) and proof of address.
• Evidence of income, such as payslips, employment details or pension statements.
• Tax returns and recent bank statements.
• Details of existing mortgages, loans and other financial commitments.
• Evidence of savings and the funds you intend to contribute.
• Accounts and supporting tax records if you are self-employed.

The lender may also ask for a credit report and documents about the property. Exact requirements vary. If your documents are in another language, check what translations or certification the chosen lender needs before paying to have everything translated.

Fixed, variable or mixed: look beyond the first payment

Portuguese mortgages can have a fixed rate, a variable rate or a mixed rate. A variable rate normally combines an index such as Euribor with the bank’s margin, called the spread. A mixed rate has an initial fixed period followed by a variable one.

I would ask what happens after any introductory period, how a higher rate would affect the payment and whether the repayments still feel comfortable. A longer term may reduce the monthly payment while increasing the interest paid overall.

Compare the European Standardised Information Sheet, known in Portugal as the FINE, for each offer. Look at the TAEG, the annual percentage rate of charge, and the MTIC, the total amount payable, using comparable amounts, terms and rate types. Check insurance, account costs, conditions for discounts and early repayment charges as well. The TAEG does not include every possible cost, including notary costs and early repayment fees.

Where insurance is required, the bank must accept an alternative provider whose cover offers equivalent guarantees. Ask how your insurance choice affects the price of the loan. Banco de Portugal’s home loan guidance explains the information you should receive.

Get the finance and the purchase contract working together

An encouraging first assessment is useful, but it is not the same as a final loan offer for a particular property. Ask what is still outstanding: the valuation, property documents, insurance, further income checks or other conditions.

Before signing the promissory purchase contract, the CPCV, I would have an independent lawyer check the terms and explain your position if the mortgage is refused, delayed or smaller than expected. Do not assume your purchase deposit will automatically be returned if finance falls through. Any financing condition needs to be properly agreed and written into the contract.

There are also formal steps to allow for. Banco de Portugal states that the approved offer is binding on the lender for at least 30 days, with a minimum seven-day reflection period for the borrower and any guarantor before the credit agreement can be signed. Ask the adviser and lawyer to allow for this when agreeing completion dates.

For an older house, annex, renovation project or property with mixed uses, ask the lender what it can finance and let the appropriate legal and technical professionals check the property. A bank valuation does not replace your own legal checks or a building survey. Our property purchase process in Portugal sets out the wider steps.

How I can help you plan the search

My job is to help you find a property that suits how you want to live and to keep the property search realistic. Corinne and the lender deal with your mortgage assessment; your independent lawyer deals with the legal checks. ACPS does not provide financial, tax or legal advice.

If you are thinking about buying with a mortgage, get in touch and tell me where you are looking, the sort of home you want and whether you have already spoken to a lender. You do not need to send me your financial paperwork. A clear idea of the budget and the stage you have reached is enough to get our first conversation going.

Best wishes,
Calvin

Calvin Gibson
ACPS Real Estate | Property by Calvin