The cold harsh truth is that buying real estate in Portugal is expensive. Even the smallest places will already cost you tens, if not hundreds of thousands of Euros already. And if you're not necessarily the richest person out there, you'll likely need financial help. That's where getting a mortgage comes into play. You can buy even the most expensive
property in Portugal if your mortgage can help you cover it. But before that, you need to get that loan first. Know the basics of applying for and getting a mortgage in Portugal so that you're more prepared when the time comes!
What are The Different Types of Mortgages in Portugal?
First things first, you need to know the different types of mortgages here in Portugal. Only then can you choose one that will fit your current financial situation. And according to
Expatica, there are two main types: a fixed-rate mortgage and a variable-rate mortgage. The former, the fixed-rate mortgage, is more common since, just as its name says, everything is fixed. Meanwhile, the latter, the variable mortgage, is dependent on the current interest rate on the market. It's a lot riskier, but many buyers for it because it also means they can pay less for their mortgage.
What Do You Have to Pay?
You've probably been told that part of buying real estate in Portugal is paying the mortgage costs. But what exactly are they? What do you need to pay in order to get a mortgage in Portugal? Well, there's the deed registration, mortgage arrangement & administration, a non-refundable commitment fee, valuation costs, and legal fees. How much some of these go for will depend on how much the property you're planning to buy will cost. But valuations are oftentimes around €500.00 to €800.00 while the legal fees usually cost at least €1,000.00.
What Documents Do You Need?
As with any other process, applying for a mortgage includes a few required documents. They include your valid ID (passport will do), proof of residency (if applicable), proof of income, your most recent bank statements, and documents relating to the property you plan to purchase. For the last one, they can either be the floor plan, title deed, and the like. Moreover, although this list of requirements includes proof of residency, it bears noting that non-residents can legally purchase real estate in Portugal. All you need is a tax number and you're good to go!
How Much Can You Borrow?
And finally, how much can you borrow for your mortgage here? This is important since this may also make or break your purchase of your desired real estate in Portugal. In truth, your residency does play a part in how much you can eventually borrow. For non-residents, most financial institutions are only willing to lend around 65% to 75% of either the property value or the final price of the property (whichever is lower). Residents, on the other hand, can borrow up to 85% to 90% of the final property price. So if, for example, you want to
move to Lisbon and buy property here, you have a better chance of borrowing a lot for your mortgage.
How can you ever afford to buy a property in Portugal? By getting a mortgage, of course! If you're already aware of the basics of the process, then you'll know what to do to guarantee that you will get that loan no matter what!
