Portuguese Mortgages

As Portugal is becoming an increasingly popular location for foreign property purchasers, it is not surprising that the Portuguese mortgage market is also developing at an impressively fast rate.

Property Purchasing Process

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Introduction to the Portuguese Purchasing Process
Portugal offers a degree of certainty and regulation that make it popular as a property investment location. Despite not having a fully developed property market, this does not detract from the security of the purchasing process; those looking for a politically and legally safe jurisdiction in which to buy property should certainly consider Portugal.

The Process
In Portugal, more than 80 percent of property is sold through estate agents. Once you have chosen the property you plan to purchase, you need to decide how much you are prepared to offer. In a similar way to the UK, advertised prices are simply °•asking°¶ prices and there is often a large degree of negotiation possible between the seller and buyer.

Once the purchase price is agreed, the buyer and seller will have to enter into a preliminary contract. This is known as the Contrato de Promess de Compra e Vende, and will detail all the terms and conditions of the sale, including anything that needs to be done to the property itself or to the financing of the purchase, in advance of the full transfer.

When the preliminary contract is signed, a deposit is payable which may be anything from 10 to 30 percent of the property value. After signing this contract, if either party defaults, they will automatically lose the amount of the deposit to the other party.

Throughout the purchasing process, a government official known as a notary or notario ensures that the legalities of the process are adhered to; the notary does not act for either the buyer or seller, but simply oversee the process.

For this reason, a buyer is advised to instruct a lawyer to look after their own interests. Although engaging a solicitor is not actually a legal requirement, it is nevertheless extremely advisable to enlist the help of a local professional.

In order to purchase a property in Portugal, it is necessary to have a fiscal number which operates in a similar way to the national insurance number in the UK. This number can be obtained from any tax office, either in person or through your lawyer.

As soon as the terms and conditions, as laid out in contract, have been met, the transfer can happen. This is done by deed and is signed in front of the notary. Transfer tax will have to be paid by the purchaser, before the transfer can be fully completed and the transfer registered.

Summary
Bullet Point The property purchasing process in Portugal is very similar to the UK, with an offer followed by contract and then completion;
Bullet Point deposits are paid once the contract is signed and can be as much as 30 percent;
Bullet Point any default after this point results in the defaulting party having to pay the amount of the deposit to the other party;
Bullet Point a notary oversees the process, but does not act for either party, so independent advice is required.

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Typical Interest Payments

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2.89%

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2.89%

Discounted Rate

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2.99%

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3%

 

 

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