Arranging a Portuguese Mortgage
A local mortgage has different requirements and possibilities, although the process of setting up a mortgage is pretty much as it is in the UK, where the bank or lender sets up a loan on the property in question, and retains a legal charge on it in case of default of payments. Applications will be considered based on the valuation of the property, the financial situation of the applicant, and the applicant's credit history and age. A loan is usually for a maximum of 15 years only, and will not normally extend beyond the retirement age of 65. Usually only up to 75% of the value of the property will be loaned, thus leaving you to find the balance yourself in cash. If you intend to let your property other than to friends and family, it is advisable to check first with the lender whether they allow 'commercial' use of the property, as it may alter the rate of interest you are charged.
It is usually quite tricky negotiating direct with a Portuguese bank yourself, unless you have already had an account out there and know you can talk things through with your local manager. People who want a Portuguese lender are better advised to go through a British broker who knows the system a little better.
It is better overall to have a mortgage in euros. With Portugal in the eurozone, having both your property value and loan linked to it in the same currency, makes it less likely to fall victim to any fluctuation in the strength of the euro against sterling.
To find a specialist broker dealing in local mortgages, contact the Federation of Overseas Property Developers, Agents and Consultants for a list of regulated operators. Tel: 020-8941-5588.
