How to finance a house in Portugal?


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.

There are a few steps to follow:

  • Check the value of the intended property and the amount you want to finance (in Portugal it is possible to finance a maximum of 90% of the value of the property);
  • Make simulations in different banks. Pay special attention to the fees charged and the type of service offered in the proposal (they can be fixed or variable);
  • Choose the bank that offers the best conditions for you and check the list of documents required by the institution;
  • Gather all required documentation;
  • Take the documents to the bank to present your credit proposal.

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?

How does real estate financing work in Portugal?

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!

Conditions for financing property in Portugal: THE MOST IMPORTANT!

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.

The 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.

Documents required to apply for real estate credit

When you go to the bank to request a credit analysis to buy a property in Portugal, you must present:

  • Identification document (Residence Authorization, Citizen Card or Passport);
  • NIF (Tax Identification Number);
  • Most recent income tax declaration;
  • Three last proof of salary or earnings;
  • Employer Entity Statement or other professional proof — statement from the company for which you provide services or have an employment contract in Portugal;

Some institutions also usually require other documents to analyze the proposal, such as:

  • Permanent Land Registry Certificate — document containing records of the property;
  • Matrix document — property tax information document;
  • License to Use the Property;
  • Plan of the property;
  • Central Bank of Brazil Credit Information System Report (if applicable).

After analyzing the documentation, if the credit is approved, the bank issues a Letter of Approval for the proposal.

Tips for getting good financing

  • The APR (Global Annual Effective Rate) can indicate the best deal (the simulation with the lowest APR corresponds to the most affordable financing);
  • The smaller the amount requested from the bank, the more chances of being able to negotiate a smaller payment installment;
  • Joining other products offered by the bank can also help lower the fees charged.

Is it better to buy before or after moving?

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!