How To Buy Property in Portugal

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How to Buy Property in Portugal

The 15 Steps to the Buying Process
  1. Assess Your Budget: Confirm how much you can borrow by speaking to one of our mortgage brokers. This will help you understand your financial capacity and set a realistic budget for your property purchase.
  2. Set Up Foreign Currency Exchange: Open an account with a reputable Foreign Exchange dealer (ask about our panel of FX dealers). This will help you manage currency fluctuations and potentially save on transfer costs.
  3. Obtain a Portuguese Fiscal Number (NIF): Before you can proceed with any property transactions, you need to obtain a NIF from the local tax office. This is essential for opening a bank account and signing legal documents.
  4. Conduct Due Diligence: Make sure to get the official tax and registration documentation in order to ensure the property is debt-free. It is highly recommended to hire one of our network lawyers to assist with this process.
  5. Secure Your Property: Agree on the price of the property and sign the Contrato de Promessa de Compra e Venda (preliminary promissory buying and selling contract). A small fee will need to be paid at this stage to secure the property.
  6. Budget for Additional Costs: Allow for an additional 5-10% on top of the purchase price to cover hidden costs such as purchase tax, notary fees, stamp duty, and legal fees.
  7. Pay the Deposit: Pay the deposit, which is usually around 15%, although it can be significantly less for new-build properties.
  8. Arrange a Mortgage: Move forward confidently by letting us arrange a mortgage that aligns with your financial circumstances and chosen property. Ensure you have all necessary documentation ready, including proof of income and the property’s valuation report.
  9. Arrange Life Insurance: Secure your financial commitments by arranging life insurance that corresponds with your mortgage amount. This is often a requirement by lenders.
  10. Open a Portuguese Bank Account: Facilitate seamless transactions by opening a bank account in Portugal dedicated to managing your property-related finances. This will also be required for paying taxes and utility bills.
  11. Arrange Building Insurance: Safeguard your investment by arranging building insurance, particularly crucial if you’re purchasing an existing property. This ensures your property is protected from potential risks.
  12. Transfer Funds: Transfer the balance of the deposit, as well as the legal fees and purchase taxes, to the notary in advance of completion (via FX dealers).
  13. Sign the Sales Agreement (Escritura de Compra e Venda): Finalise your purchase by signing the sales agreement in the presence of the notary.
  14. Register the Property: Register the property in your name at the Land Registry office and the Local Tax Office.
  15. Completion: Congratulations! Once all formalities are concluded and the deed is signed, you officially own the property. Ensure all utilities and services are transferred to your name and enjoy your new home in Portugal.
 

Paying your deposit 

Depending on if you are buying an existing property or new build, the deposit can range anywhere from 10 to 20%, lower if you are purchasing a new build property. At Worldwide Property Company we always encourage our clients to pay the deposit to the Notary, and not to an estate agent. This avoids any conflict of interest if you have to withdraw from the purchase for any reason.

Preliminary Purchase Agreements

When purchasing a property, you will be required to sign a preliminary promissory buying and selling contract (a contrato de promessa de compra e venda). Prior to this, the property registration certificate and the property tax document need to be obtained by your legal representative. The preliminary agreement will outline all the details of the property, as well as the details of the seller and buyer. If you are buying with finance, it’s very important to include specific details of your mortgage within the agreement. Portuguese law will ensure both parties are protected whereby if the purchaser pulls out of the agreement he forfeits the deposit, and if the seller withdraws then he will be liable to pay double the deposit to the purchaser. 

What type of property can I get a mortgage on? We can arrange mortgages for individuals or companies to buy…

  • Main homes
  • Second or Holiday Homes
  • Rental or Investment Properties
  • Off-plan / New Build Properties
  • Commercial Properties
  • Equity Release mortgages are available
  • Bridging Finance is also available

What currency will my mortgage be in?
Although it is possible to arrange mortgages in all major currencies, it’s normal for a mortgage secured against a Portuguese property to be in Euros.

What is the maximum loan amount (LTV%)?
Depending on the valuation of the property, or purchase price, non-residents can borrow up to 85%.

What is the minimum loan amount?
The minimum mortgage available for non-residents is €100,000

How long is the term of the mortgage?
The mortgage term can be up to 50 years for residents and 30 years for non-residents. There is usually a maximum age of 70 or 80 upon the maturity of the loan, which will vary according to the terms set out by the lender. 

Do I need life assurance for a mortgage?
Life Insurance is usually mandatory in Portugal, and the majority of lenders will require this as collateral against a loan. 

Completion

After your mortgage has been arranged and the Notary has completed the necessary checks, the final stage is to sign the Sales Agreement, known as the Escritura de Compra e Venda. You can sign this agreement in person at the Notary's office, or grant a Power of Attorney to do so on your behalf.

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