Portugal
With some of the best golf in Europe Portugal is becoming one of the most popular places in Europe to move to or buy a second home. Especially on the well estasblished Algarve and up and coming Silver Coast.
With local branches and a team of local, English-speaking experts across Portugal, our partners can help you every step of the way towards making your dream a reality.
North Mortgages offers mortgages on a wide range of properties in Portugal including purchase, buying off-plan, self-build and remortgaging. However, we're unable to lend money for properties classed as 'rustic' i.e. those in rural or agricultural areas.
You can choose repayment periods of up to 20 years, which can even be extended to 30 years with our new Leasing Product. The interest rate will be linked to the EURIBOR (European Inter Bank Offered Rate) and we'll use the published 3-month or 6-month rate to calculate your client's monthly mortgage payments. These will be fixed for 3 or 6 months and will then be recalculated and reset.
4 years Interest Only option
This is a new mortgage which is ideal for anyone who wants a holiday home in Portugal. It can be used to buy a property, self build, or renovate an existing home your client owns. It can also be used for equity and equity release.
Purpose
Acquisition, self-building projects, home improvements, home equity and equity release. Unacceptable properties include commercial properties and 'rustic' properties in rural/agricultural areas. For private individuals only.
Leasing Products
This a new way for our clients to finance their property in Portugal. Our Leasing product is similar to a normal mortgage, but Barclays will own the property until the end of the leasing. It offers a range of benefits over a traditional mortgage.
Stage Payment Products
This is a fixed-rate mortgage over two years. It allows our clients to borrow anything from €20.000 to 40% of the amount stated in the Sales and Purchase Agreement.
Extra costs you will need to consider
You should probably tell your client to allow for an extra 15% on top of the purchase price to cover things like:
- Property Transfer tax (Imposto Municipal Sobre Transmissão Onerosa de Imóveis - IMT), which is based on a sliding scale from 0% to 8% of the declared value
- Notary charges, which cover Stamp Duty, administrative and registration costs for the notary's time. These are usually 1% of the purchase price
- Legal charges depend on the loan amount and on the Montante Declarado Para Escritura (declared purchase price) but you should tell your client to allow for 1.5% to 2%
- Surveyor charges (if your client decides to use one) is usually similar to legal charges. They should allow 1.5% to 2% of the purchase price.
Income Assesment - worked example
In Portugal, the mortgage amount your client can apply for is based on their savings capacity percentage. You can calculate this by dividing their monthly expenses by their monthly income (see example below).
You should also bear in mind that the maximum allowable Loan to Value is 70% of the property valuation.
| Net monthly income | Amounts € |
|---|---|
| Joint gross income | 100,000 |
| Joint gross income after tax (assumptions - 25% tax deduction) | 75,000 |
| JGI after tax less annual expenses (Insurance, holidays etc.) | 75,500-3,000 = 72,500 |
| JGI after tax less annual expenses/12 | 72,500/12 |
| Monthly net income | = 6,000 |
| Monthly expenses | Amounts € |
|---|---|
| Monthly commitments (Food, Utility bills, school charges, credit cards, personal loans, etc.) | 1,200 |
| Existing mortgage Loans monthly repayments | + 1,780 |
| Monthly repayments for the local loan required | + 620 |
| Monthly expenses | = 3,600 |
Monthly expenses should not exceed 60% of monthly net income.
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At North Mortgages our Mortgage Experts will take care of everything on your behalf. Remember, we source mortgages from the whole of the market, so you know your getting the best deals available and all tailored to suit your personal circumstances.
Call NOW on: 08000 949 595 or contact us today to arrange a Call Back.
