If one of your new year’s resolutions is to finally buy the holiday home in Portugal that you’ve been dreaming with, congratulations! We truly believe that buying a home in Portugal, is a wonderful idea, just make sure you assess your financial situation before you begin your journey.
From the planning, visiting and financing of your property, through to completion and ownership, if one of these steps is not managed or researched carefully, problems can arise, typically leading to stress and the loss of money. We can assist you in all financial matters related with your purchase, including the mortgage in case you need one.
Buying a property, and spending tens or hundreds of thousands of euros, is a big decision and you need to understand your exact limits. Firstly you need to be sure how much money you can comfortably use and what your source of funds is – savings, selling or mortgage, etc. You also need to think about the other costs involved in buying a property (legal fees, tax, etc.) along with the annual expenditure for maintenance. Also you may eventually need to be aware of how exposed you are to currency fluctuations, in case you are out of the Eurozone.
The last thing you want to do is fall in love with and agree to buy a particular property you can’t realistically pay for. Many prospective buyers have fallen into the trap of failing to calculate all the costs and then running out of money before they have the house.
Once you have confirmed the price range that you can afford and how you will finance the full purchase of the property, you can determine where and what type of property you can purchase. Paying for the property is only half of the equation – the other half is understanding the day-to-day costs of maintaining the property and your lifestyle.
The key financial matters to consider are:
- The total amount of money you have available to purchase a property
- If you buy with a mortgage, how much of a deposit you will need and how you will service the monthly repayments
- Costs that come with buying property (i.e. taxes and fees)
- Your maximum purchase price (including taxes and fees)
- The cost of maintaining the property and spending time in Portugal
Mortgage advice is one of our areas of expertise, and we strongly recommend our clients, to avoid re-mortgaging their home property. If anything changes in their life, it’s obvious that the property you will want to keep is the home where you live. Also, the difference of half percent, may represent thousands of euros, during the term of you mortgage. We search the market for the lowest rates regularly and save our clients thousands of euros when they move abroad. We also help you through the whole process.
Mortgage offers change on a daily basis, so it’s best to contact a mortgage broker to determine what the current offers are. You will also need an understanding of how much cash (your deposit) is needed in relation to the mortgage amount. Currently, as a non-Portuguese national you will be asked for a deposit of between 20-40%, depending on the type of loan and the borrower’s circumstances. Eventually mortgages up to 100% may be available, in case of bank-repossessed properties, but there are not a lot of these in the market.
When applying for your mortgage you will need to provide proof of income and identity, and details of your bank account and liabilities.
To buy property – as well as to open a bank account and to connect to utilities – in Portugal you will need a Portuguese Fiscal Number (NIF), which can be obtained from the local tax office. We can act as your fiscal representative and assist you in all these matters.
If you are looking to buy a property in Portugal, or if you have any other questions, please feel free to contact us, we aim our expertise and know-how to work in your benefit. Pass by our office for a friendly chat and find out more about the mortgage that better suits your individual circumstances.