If you are a foreigner willing get a mortgage in Portugal, you have to present the following documents in order to get the process completed:
If you have a Portuguese permanent address: * ID Card or Citizen Card * Last Income Tax Return and its Notice of Settlement * Duplicates of the last three payroll documents * Employment confirmation letter * Documentation of property * Floor plan of the apartment or house in Portugal that you are planning to buy * Plan of the building * Documents about other incoming sources (if needed) * Bank Statements (in Portugal and Overseas) * Credit Report
In addition if you don´t have a permanent address in Portugal you will need: * ID Card or Citizen Card * Tax returns * Employment Contract * Bank statements of all the bank accounts * Duplicates of the last three payroll documents * Credit Report
Which kind of mortgage loans exist in Portugal???
There are essentially three kinds of mortgage loans in Portugal to buy your Portugal
Property. Basically you can have: * Acquisition Loan : this is the most common loan for buying houses in Portugal. This can be used to buy a home for permanent residence or, alternatively, as a second home for vacations or investment. * Loan to buy land: this is a special kind of mortgage loan that can be used to buy a land in order to build a house afterwards. * Transfer a loan to another bank : this kind of loan, which in Portuguese is called Transferência de Crédito Habitação, has the purpose of transferring a current loan to another bank, where you may pay less in interest rates.
Loan Calculator and the LTV:
Please be aware that a down payment will be required in order to buy a house in Portugal. This will be affected by the Loan-to-Value (LTV), which can range from 60% to 70% in the case of foreign buyers. This means that you would have to be ready to pay between 30% to 40% of the value of the home in Portugal as a down payment. For example, if the house that you are interested in costs about 200.000 €, you may be asked to make a down payment ranging between 60.000 € and 80.000 € so that the bank will provide with a loan for the remaining amount.
What is the FINE and how to read it???:
The Ficha de Informação Normalizada Europeia (FINE), is a document where the standardized information regarding each mortgage loan is in Portugal specified. When a bank accepts your process, they will send you a document that aggregates all the relevant information. In this document you can find the interest rate, commissions and all the other costs included in the mortgage loan.
Fixed vs Variable rate mortgages???:
When getting a mortgage in Portugal, you will have the possibility to choose between a fixed or variable rate. In the first case, you will have a loan with a rate the does not change for a set period of years. You are then protected from the market fluctuations, but you won't benefit if the rates go down. Another alternative is the variable rate, which is indexed to the Euribor rate and follows its evolution. If the Euribor goes down, you can expect to pay less in your loan repayment. The opposite happens when the Euribor goes up. A loan calculator can show you the variable rates from the banks. Also, if you wish to get a loan, for example, to refurnish your new house the bank can also lend an approved amount so long as you present certified estimates and that all works are licensed with local authorities.
Mortgage Conditions: * Interest rate – the rate used for home loans in Portugal is Euribor after which the bank applies its margins. * Terms of mortgage – most mortgages in Portugal for non-residents are between 25 to 30 years. * Lending criteria – this usually depends on your financial position which is determined by your current income earnings, debts and employment history. Also considered here is the property valuation by the bank. * Insurance – When contracting a mortgage loan, you will have to contract life insurance as well. In some cases, the banks usually require home insurance too.
Costs and fees for a mortgage in Portugal with a Property Value of 400.000€: * Loan: 280.000€ - 70% LTV - 120.000€ Deposit * Fixed Rate 4.1% for a Five year Rate for 70% Loan to Value (0.2% Charge for Early Repayment) * Variable Rate (Follow Rates Provided by Euribor Revised Every 3 and 6 Months) 3.3% for 30% LTV or 3.4% for 60% LTV (.5% Charge for Early Repayment)
Purchase Costs: * IMT: .2% - .8% Property Transfer Tax: 20.400€ * IMI: .8% Stamp Duty Tax: 3.200€ * Property Deed Fees: 1.200€ * Lawyers Fees: 1.800€ * Application Fee Fixed: 290€ * Bank Valuation Fee: 280€ * IMI (Stamp Duty): 1.680€ * Mortgage Deed Fees: 1.200€ * Total Costs: 29.690€
Cost of purchasing a house in Portugal: * Property tax (IMT) ranges from .2% to .8% * Stamp Duty Tax (IMI) 0.8% of the price of the property * 1.200€ notary, registry, and tax office fees for property deeds * 1.800€ estimate of legal fees290€
Cost of taking out a mortgage in Portugal: * 290€ Application fixed fee * 280€ Bank valuation fixed fee * Stamp Duty Tax (IMI) 0.6% amount of mortgage * 1.200€ notary, registry and tax office fees for mortgage deeds
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