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To finance a house in Portugal, you must obtain approval for a mortgage from a Portuguese bank or financial institution. And yes, it’s not that easy, but we’ll guide you through it in this article. Let’s go.
And then, the bank, in accordance with institutional requirements, will verify the documents of the application submitted to confirm that you meet all the requirements to receive the mortgage.
Easier said than done, we know. So, what more do you need to know?
Basically, the banks make the so-called mortgage credit, in which a percentage is financed to the bank and the other part is given as a down payment. In this financing, the property you bought acts as the payment guarantee.
With the information provided by you, mainly on your income, the bank makes an analysis and provides a personalized credit option for your case, based on your financial capacity to comply with payments.
It is important to know that not all banks offer the same type of condition to finance property in Portugal. So, we recommend that you do a credit simulation at different institutions, ALWAYS!
The main condition for getting a property loan in Portugal is to be able to prove the financial capacity to pay the loan installments, called the effort rate. In short: you need to demonstrate to the bank that you have enough income to fund the commitment.
. effort rate is understood as the percentage of the monthly earnings of the applicant(s) for funding that can be committed to guaranteeing payment. In Portugal, institutions understand that the monthly amount of financing should not compromise more than 1/3 of the amount of monthly income.
When you go to the bank to request a credit analysis to buy a property in Portugal, you must present:
Some institutions also usually require other documents to analyze the proposal, such as:
After analyzing the documentation, if the credit is approved, the bank issues a Letter of Approval for the proposal.
Considering that buying can be cheaper than renting in some cases, it makes a lot of sense to buy before moving to Portugal.
The advantage is that you can use the job and business you have in your country to prove income and thus save a relevant amount of the difference between rents and property installments. It is always important to consider upfront costs such as entry and other additional costs.
If you regret your choice of property, as the Portuguese market is very strong, you will have no difficulty selling.
Are you ready to buy a house here and need help with financing? We got your back. Get in touch with us!