finanças

How to get a mortgage in Portugal

14 jan 2025 | 6 min of reading

Portugal is the place where your dream home can finally come to life – and we’re here to show you how to make it happen.

Thinking about buying a home in Portugal? Know that you’re not the only one. Portugal has become a favorite destination for those looking to start a new chapter, from its charming cities and stunning coastlines to the warm climate and friendly vibe.

 

In this guide, we’re delving into everything you need to know about securing a mortgage in Portugal. No complex jargon, just the essential information to empower you to confidently take the next step in your property purchase.

 

 

Can foreigners get a mortgage in Portugal?

Yes, foreigners can get a mortgage in Portugal. Whether you're from the EU or outside it, the process is similar to that for locals, though there are a few differences depending on your residency status. Generally, banks are pretty open to lending to foreign buyers, but you’ll need to meet specific eligibility requirements.

 

 

Types of mortgages (fixed vs. variable rates)

Let's start by talking about interest rates. When applying for a mortgage in Portugal, you’ll be faced with the decision between a fixed-rate mortgage and a variable-rate mortgage:

 

  • Fixed-rate mortgages: give you the peace of mind of knowing exactly how much you'll be paying each month, as your interest rate stays the same for the duration of the loan

 

  • Variable-rate mortgages: are often tied to the Euribor (European Interbank Offered Rate) and can fluctuate over time, meaning your payments might go up or down depending on the market.

 

The choice between fixed and variable depends on your preference and risk tolerance. Fixed rates offer stability, while variable rates offer savings if interest rates decrease.

 

 

Loan-to-value (LTV) ratios for residents vs. non-residents

The Loan-to-value (LTV) ratio is the percentage of the property’s value that the bank is willing to lend you. For residents, banks generally offer up to 90% LTV, meaning you'll need to put down at least 10% of the property price. For non-residents, the LTV can be slightly lower, typically ranging from 65% to 75%, meaning a larger down payment may be required.

 

But there’s good news on this front! Keep reading.

 

 

Is a 100% mortgage available? (State Guarantee for young adults)

While 100% mortgages are not typically available for most buyers, some banks offer up to 100% financing to young adults first-time buyers, especially if they have a strong financial profile and can demonstrate stable income.

 

 

Documents needed

You'll need a set of documents to prove your identity, income, and financial stability to apply for a mortgage in Portugal. Common documents include:

 

  • A valid passport or ID card
  • Proof of income (pay slips, tax returns)
  • Bank statements from the last three months
  • A Portuguese Tax Identification Number (NIF)
  • Proof of employment or self-employment status.

 

 

Eligibility for foreigners

EU Citizens: simplified requirements

EU citizens generally have an easier time securing a mortgage in Portugal. The requirements are similar to those for Portuguese residents, but you’ll still need to provide the necessary documentation and meet the LTV ratios set by the banks.

 

 

Non-EU Citizens: higher deposits & extra documentation

The process might be a bit more complicated if you're from outside the EU. Non-EU citizens must typically provide a higher deposit (around 30% to 40% of the property value) and additional documentation, such as proof of employment, income, and a clean credit history.

 

 

Step-by-step application process

Although it is a straightforward process, it can still take some time. Here’s a general overview of the steps involved:

 

1. Get pre-approval: the first step is to get pre-approval for your mortgage. This involves providing essential information to the bank, such as your income, the amount you wish to borrow, and the property you want to buy

 

2. Submit documents: once you're pre-approved, you'll need to submit your full application with all required documentation (ID, proof of income, bank statements, etc.)

 

3. Property valuation: the bank will carry out a property valuation to ensure the property is worth the loan amount. This process can take a few weeks

 

4. Mortgage offer: once the bank approves your application and the property valuation is complete, you’ll receive a formal mortgage offer, which you’ll need to sign

 

5. Completion: the final step is completing the purchase. Once the mortgage is officially approved, you'll sign the contract, and the bank will release the funds for the property purchase.

 

Want to get an idea of how much you can borrow? Check out our article to see the step-by-step process on how to calculate your mortgage.

 

Reading information about Mortgage in Portugal

 

Costs beyond the mortgage

Taxes (IMT, Stamp duty, IMI)

IMT (Property Transfer Tax): based on the purchase price and can range from 2% to 8.8%, depending on the value of the property

Stamp duty: typically 0.8% of the purchase price

IMI (Property Tax): an annual tax that ranges from 0.3% to 0.8% depending on the location and value of the property.

 

 

Notary fees, insurance, and bank fees

Notary fees, insurance, and bank fees are also part of the costs involved. You’ll need to pay for life insurance to protect the bank’s investment, and notary fees vary depending on the property's value. Additionally, banks may charge administrative fees for processing your mortgage application, which can differ depending on the bank and the complexity of the loan.

 

 

Applying for a mortgage in Portugal? 3 important tips

Start the process early: the mortgage application process can take time, especially for non-residents. Starting early will give you ample time to gather all the necessary documents

 

Work with a mortgage broker: a broker can help navigate the system and ensure you're getting the best deal for your circumstances

 

Have sufficient funds: be prepared to show you have enough savings to cover the down payment, taxes, and additional costs.

 

 

Frequently asked questions on how to get a mortgage in Portugal

Do I need a Portuguese bank account?

Yes, to secure a mortgage, you’ll typically need a Portuguese bank account to make payments and handle transactions.

 

 

Can I get a mortgage with a freelance income?

Yes, but you’ll need to provide additional documentation, such as tax returns and bank statements for the past three years, to prove your income stability.

 

 

Do Portuguese banks accept co-signers from outside the EU?

Yes, some banks will accept co-signers from outside the EU, but they will likely require additional paperwork.

 

 

Can I rent out the property while paying off the mortgage?

Yes, you can rent out your property, but keep in mind that rental income may not always be considered in the mortgage affordability calculation.

 

 

Can I refinance my mortgage in Portugal as a foreigner?

Yes, you can refinance your mortgage in the future, but it will depend on the bank and your financial situation at that time.

 

 

 

The information provided isn’t a substitute for consulting public or private experts in each area.

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Informação de tratamento de dados

O Banco Santander Totta, S.A. é o responsável pelo tratamento dos dados pessoais recolhidos.

O Banco pode ser contactado na Rua da Mesquita, 6, Centro Totta, 1070-238 Lisboa.

O Encarregado de Proteção de Dados do Banco poderá ser contactado na referida morada e através do seguinte endereço de correio eletrónico: privacidade@santander.pt.

Os dados pessoais recolhidos neste fluxo destinam-se a ser tratados para a finalidade envio de comunicações comerciais e/ou informativas pelo Santander.

O fundamento jurídico deste tratamento assenta no consentimento.

Os dados pessoais serão conservados durante 5 anos, ou por prazo mais alargado, se tal for exigido por lei ou regulamento ou se a conservação for necessária para acautelar o exercício de direitos, designadamente em sede de eventuais processos judiciais, sendo posteriormente eliminados.

Assiste, ao titular dos dados pessoais, os direitos previstos no Regulamento Geral de Proteção de Dados, nomeadamente o direito de solicitar ao Banco o acesso aos dados pessoais transmitidos e que lhe digam respeito, à sua retificação e, nos casos em que a lei o permita, o direito de se opor ao tratamento, à limitação do tratamento e ao seu apagamento, direitos estes que podem ser exercidos junto do responsável pelo tratamento para os contactos indicados em cima. O titular dos dados goza ainda do direito de retirar o consentimento prestado, sem que tal comprometa a licitude dos tratamentos efetuados até então.

Ao titular dos dados assiste ainda o direito de apresentar reclamações relacionadas com o incumprimento destas obrigações à Comissão Nacional da Proteção de Dados, por correio postal, para a morada Av. D. Carlos I, 134 - 1.º, 1200-651 Lisboa, ou, por correio eletrónico, para geral@cnpd.pt (mais informações em https://www.cnpd.pt/).

Para mais informação pode consultar a nossa política de privacidade (https://www.santander.pt/politica-privacidade).