How to Buy Property in Portugal
The 15 Steps to the Buying Process
- Confirm how much you can borrow by speaking to one of our mortgage brokers
- Open an account with a reputable Foreign Exchange dealer (ask about our panel of FX dealers)
- Make sure to get the official tax and registration documentation in order (to ensure the property is debt free)
- Agree the price of the property and sign the contrato de promessa de compra e venda (preliminary promissory buying and selling contract)
- Allow for an additional 5 - 10 % on top of the purchase price which will include hidden costs such as purchase tax, notary fees, stamp duty and legal fees
- Pay the deposit (usually around 15% although significantly less for new-build properties)
- Arrange a mortgage
- Arrange life insurance to cover the mortgage
- Open a Portuguese bank account
- Arrange building insurance (existing property only - not off-plan)
- Transfer the balance of the deposit, as well as the legal fees & purchase taxes to the notary in advance of completion (via FX Dealers)
- Sign the sales agreement (the Escritura de Compra e Venda)
- Pay the balance of the purchase price minus your deposit
- Register the property in your name at the Land Registry office and Local Tax Office
- Complete – Congratulations !!
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.
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.