Getting A Mortgage In Portugal
Should I Get A UK or Portuguese Mortgage?
Portugal does not have any restrictions on foreigners owning property, but you will find that not all Portuguese lenders will be willing to provide mortgages for foreign buyers. This may mean it is easier to arrange a mortgage through a UK lender.
This gives you two main choices:- Remortgage or secure a second loan against your existing home
- Take out a Portuguese mortgage - but through a UK company specialising in foreign mortgages
Both of these options are likely to be a lot less hassle than organising a mortgage directly from a Portuguese lender, and may also give you the advantage of having your mortgage in pounds - not Euros.
Having your mortgage in the same currency as your income is often a good idea because it protects you from changes to the exchange rate. If your income is in pounds and your mortgage payments are in Euros, then your monthly payment will go up and down in line with the exchange rate. This can be very stressful.
Before you start the purchase process, it is a good idea to contact an independent UK mortgage broker specialising in overseas mortgages. They will be able to look at your circumstances and talk through your options with you to help you decide what will work best for you and how much you can afford to borrow.
Getting A Mortgage In Portugal
If you are planning to take out a Portuguese mortgage - whether it's via a UK lender or direct - then you'll need to understand what kind of mortgages are available.
Portuguese lenders will normally offer mortgages for terms of up to 20 years, or until your 75th birthday. Typically, you will not be able to borrow more than 75% of the property's valuation (not necessarily its purchase price).
You may also find that you have difficulty finding a mortgage if you are buying a "Rustic" property - one that is in a very rural area.
Loans are calculated based on your net monthly income - your monthly repayments will not be allowed to exceed around one-third of your net monthly income and you will have to provide evidence of your income and outgoings.
If You're Employed
Borrowers who are employed will need to provide the following documents when applying for a mortgage:
- Current employment contract and/or reference from employer stating income
- Last 2 years' P60s
- Last 3 months' payslips
- 6 months' personal bank statements
You may also have to provide bank statements and details of any outgoings you may have such as child maintenance or loan payments.
Self-Employed Borrowers
Along with most European countries, Portuguese lenders do not offer self-certified mortgages. If you are self-employed you will need to provide:
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Last 3 years' audited accounts
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A letter from a chartered accountant verifying the accounts and providing details of the income you draw from your business
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Last 2 years' tax returns
You may also have to provide bank statements and details of any outgoings you may have, such as child maintenance or loan payments.
Rental Income
Portuguese mortgage lenders will not take into account potential rental income when calculating your mortgage offer - you need to be able to afford the property without its rental income.
Read
On
•
Introduction
• Buying A Property In Portugal - 5 Easy Steps
• Should I Get A UK or Portuguese Mortgage?
• Getting A Mortgage In Portugal
• Other Things To Consider Before Buying In Portugal
• Glossary of Key X Terms
Buying
Overseas Property and Mortgages
