Applying for a Portuguese Mortgage as a Foreigner
In this article, we will point out the possibility of foreigners acquiring a Portuguese mortgage.
If you have found your dream Algarve property and have decided you want to go ahead and buy it, you will need to decide on how you are going to proceed.
If not why not browse through our Algarve properties for sale? We have a great selection and a wide variety to choose from.
If you have the Cash it’s Straightforward
To begin with, if you are a cash buyer then the only steps you need to follow are to take the normal precautions you would if you were buying in your native country.
For example, you must find yourself a knowledgeable local solicitor who has plenty of experience in the Portuguese property-buying process.
The rest of the process is quite straightforward and you should be able to complete your purchase within a few weeks if the sale is uncomplicated however if there are any complications it could take up to two months.
When Should I Start the Mortgage Process
If on the other hand, you are hoping to arrange finance in the form of a mortgage from one of the Portuguese banks, then making proper financial arrangements for purchasing the property is a must.
It is best to start on the front foot and get things moving as soon as you have decided you want to buy.
You should really consider approaching the banks to speak about your options for the mortgages they can offer as soon as you think you are in the position to buy.
This can avoid disappointment later should you be turned down after making an offer on your dream Algarve property and find you are not eligible for one reason or another. Also, go into a few banks to find the best terms on offer for your particular situation.
The first factor to take into consideration is the deposit amount. For non-residents, you would normally be asked to provide 30% of the property price as a deposit to secure your loan.
On the other hand, if you are a resident the deposit drops to 10-15% depending on the bank and the property. Depending on your situation and bank balance it may pay you to apply for a residence permit before you chase your mortgage application.
Here’s the Good News
If you are a foreigner or non-resident of Portugal looking to buy Algarve property and are looking to do so with a mortgage to finance the purchase, now is a great time to do so as the banks are now lending again due to the economic recovery in Portugal and the solid state of the property market.
So now you know when you should start thinking about enquiring about a mortgage in Portugal, let us look into the status that is required and the criteria you will need to meet to be able to apply for finance for the purchase of an Algarve property in Portugal.
Getting a Mortgage in Portugal
Fortunately, Portugal does have an outstanding record for welcoming ex-pats. The conditions for foreigners getting a mortgage are more or less straightforward.
For the most part, mortgages are the most popular way to finance buying a property in Portugal. Not only can residents apply for a mortgage from Portuguese banks but non-residents are also able.
The current variable mortgage rate in Portugal starts at approximately 3.3% per year based on a 30% loan to the overall value of the property.
Those rates can increase if you require more finance for instance 60% to 70% loan to property value. If you are looking for fixed rates they are available at around 4.1% for up to 5 years based on loan-to-value ratios of up to 70%.
Although applying for a mortgage as a foreigner in Portugal, especially if you do not speak the local language, may seem like a daunting task there is always help at hand.
If you are interested in finding out more about applying for a mortgage in Portugal to buy your Algarve property contact one of our expert team members who will help to guide you in the right direction.
With connections to the best financial advisers and mortgage brokers in the Algarve, we can turn your dream into a reality.