Portugal Mortgages & The Buying Process in Portugal
The purchase of property Portugal of all types i.e. Land, Villa or Apartment is a regulated process. Once a purchase price is agreed with a vendor both parties will sign a Contrato de Promessa de Compra e Venda (Promissory Contract) and pay deposit of usually between 10%-30% of the purchase price. It is at this point that you will require the services of a properly qualified property lawyer/solicitor who speaks your language. It is our experience that it is often advantageous to engage the services of a good lawyer/solicitor prior to the signing of any Promissory Contract to ensure that the property you wish to purchase is free of debt, restrictive clauses and in the case of land purchase that you are able to build on the land.
Your deposit will be forfeited if you do not proceed with the purchase for any reason. The vendor will forfeit double the deposit paid, if unable to proceed with the sale or withdraws from the sale for any reason. A property transfer tax called Imposto Municipal Sobre Transmissões (IMT) formally called SISA is payable on a sliding scale before the ‘escritura de compra e venda’ (property deed) can be drawn up by the lawyers. Your lawyer/solicitor will calculate the amount payable for you. The balance of the purchase price and all other outstanding fees and taxes such as ‘Imposto de Selo’ (Stamp Duty) are paid on completion at a notary advogado when both the vendor and purchaser sign the ‘escritura de compra e venda’ (property deed) at a notary’s office. It is possible to give your lawyer power of attorney to sign of your behalf if you are unable to be in Portugal at this time.
Obtaining a Mortgage in Portugal
Mortgages in Portugal can be arranged for the acquisition of property, renovation or construction, the mortgage is secured against the land or property here in Portugal. All mortgages are full status and proof of income and outgoings will be required by the lenders. It is also a requirement to open a bank account with the bank providing the mortgage.
Maximum loan available is 80% of the loan to value (with no upper limit) with a maximum term of 30 years up to the age of 80 years, (e.g. a 25 year loan is available for a person aged 55 years at the time of purchase).
Maximum loan available is 90% of the loan to value (with no upper limit) with no maximum term up to the age of 80 years (e.g. a 55 year loan is available for a person aged 25 years at the time of purchase).
Bank & Legal Fees & Charges:
Mortgages4Portugal charge no arrangement fees for our services as we are remunerated by the mortgage lender on the successful completion of the ‘escritura de compra e venda’
If we are unable to obtain a mortgage offer we still make no charge.
Most lawyers/solicitors will charge between 1 & 2% of the purchase price of the property as their fee.
Notary & Registration Fees:
Normally approximately 2.0% of the property purchase price.
Bank Mortgage Arrangement Fee:
From €150 EUR to 0.25% of the property valuation
Bank Valuation Fee:
All banks in Portugal mostly charge a valuation fee of the property to be purchased unless the bank concerned has already pre-valued properties on say a new development. The charges vary from bank to bank but range from €150 EUR +IVA to €400 EUR + IVA.
Bank Administration Fee:
from €200 EUR to €350 EUR
IMT (Municipal Property Transfer Tax):
Charged on a sliding scale based on the type of property purchased and value (Your lawyer will calculate this for you)
Imposto do Selo (Stamp Duty):
0.6% of the mortgage value
Some banks in Portugal will insist on you taking out their own life insurance together with Building multi-risk Insurance. Other banks will allow a foreign Life Insurance policy providing it can assigned to the bank as cover for the loan.