Mortgages / Loans In Portugal
When purchasing a property in Portugal, having a mortgage or loan in euros makes sound financial sense as you can benefit from the low interest rates in Portugal. It also means that your asset and loan are in the same currency so you can clearly compare the reduction in your debt against the capital appreciation of your property.
Loans In Portugal – A Solution For Cash Buyers With A Poor Exchange Rate
If you are cash buyers and have the sterling capital but are hesitant or wish to avoid the poor currency exchange rate, you can transfer across your sterling into a sterling bank account in Portugal. A short term euro loan can be secured against your sterling savings with the euro loan being redeemed when the £ rate improves and you are comfortable to do the currency exchange. Although you will be paying interest on your loan, you however will be receiving interest on your sterling savings, probably more than you will be receiving in the UK.
Additionally, this is also an alternative method to those that require a mortgage but will still need to convert their sterling to euros to form part of the deposit for the purchase. A mortgage can still be obtained against the property with the sterling savings in a Portugal bank account being used to raise a euro loan for the deposit.
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Mortgages In Portugal – Your Loan & Asset In The Same Currency Asset
Mortgages / loans in Portugal are available with variable rates, interest only or fixed term rates to a maximum amount of 70% of the valuation of the property. To apply you would need to complete an application form and supply the following documents below and a decision is usually given within 3/4 complete working days.
Copy of each applicants passport
Last 3 months bank statements -current & savings accounts
Proof of residential address (i.e utility bill)
Credit report (available from www.experian.com or www.equifax.com or www.icb.ie)
If employed
3 most recent salary slips
Copy of last years tax declaration (i.e P60)
Letter from employer stating professional status, length of service & gross annual income
If self employed
Copies of last 2 years company profit & loss accounts signed by certified accountant
Self assessment tax return
If retired
Copy of pension statement
If your loan is approved a valuation will then be carried out on the property and you will then receive a formal offer letter stating terms & conditions. Your lawyer will deal with the pre- registration of the mortgage and provide all of the property documents so that a date can be booked for the signing of the deeds. (If your lawyer has Power of Attorney it is important that you inform him/her that you are applying for a mortgage so that they can include a special clause on the POA to allow them to deal with pre-registration of the mortgage)
You should allow between 4-6 weeks to complete fully as timing can depend on the property you are purchasing and the correct documentation being presented. The loan that you will receive from the bank will have two amounts debited from it – the first being a government mortgage stamp duty of 0.6% of the loan amount and the other being mortgage arrangement fees.
Email here for more information on mortgages / loans in Portugal
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