Foreigners can access a UCI mortgage in Portugal up to 3,000,000 EUR
Foreigners can access a UCI mortgage in Portugal up to 3,000,000 EUR

How to get a mortgage in Portugal as a foreigner [2024]

Having decided that you want to buy a house or apartment in Portugal, you might find yourself wondering what the best way to proceed with finding and applying for a suitable mortgage might be. Rest assured, you have arrived at the right place - we're here to explain your options and help you find a mortgage based on your individual situation.

Delia Mihuț
Written by Delia Mihuț
Published at 2022-11-02
Last updated on 2024-04-15
Readtime 7 minutes

Considering a new beginning in a place blessed with sunny skies and welcoming warmth? Portugal might be your perfect destination for property purchase. The growing community of foreign residents, including many from the UK, will ease your transition.

This guide offers details on securing a mortgage in Portugal as a foreigner, highlighting the top mortgage options available and the application procedure.

What is the process for getting a mortgage in Portugal as a foreigner?

Here are a few steps you need to take in your mortgage application process: 

#1. Make sure you have all necessary paperwork ready, including your passport, NIF, proof of income, tax form, bank details, and any other essential documents.

A solution that can optimize your time is Homevest, a digital service that centralizes your credit file in one place for you to apply to multiple banks. 

Once you've uploaded all the mortgage documents onto the platform, you can conveniently manage and track the progress of your application directly from your account. 

#2. Obtain pre-approval to understand how much a bank might lend you. While this step provides a ballpark figure, it's not a loan guarantee.

#3. Property valuation to help match or get closer to your desired purchase price. While banks may offer their own valuation services, often free or at a fee, obtaining an independent appraisal ensures a more accurate property valuation. 

#4. Submit your mortgage application. The bank will conduct a thorough review, and if your application meets their criteria, the bank will extend a mortgage offer.

#5. Consult a notary and obtain legal counsel to ensure all documentation aligns with Portuguese law.

#6. Close the deal and sign the mortgage. Upon completion, the bank will disburse the loan amount to the property seller, making you the proud owner of your new Portuguese property.

What mortgage can you access in Portugal with income from abroad?

Individuals with income from abroad can access fixed, variable, and mixt mortgages in Portugal under certain conditions:

Repayment length

While Portuguese mortgages can have a duration of up to 40 years, foreign residents usually find their options ranging between 5 to 30 years.

Debt-to-income ratio

Lenders generally maintain a maximum debt-to-income level of 35%. This means that your monthly loan expenses, including the new mortgage you're considering, shouldn't exceed 35% of your monthly income.

Loan-to-value ratio

EU non-resident applicants are eligible for an LTV ratio of 75%-80% while Portuguese citizens living abroad are eligible for an LTV ratio of 85%.

Age restrictions

Many lenders impose an age limit for mortgage applicants. Typically, they require that the mortgage should be fully paid off before the borrower turns 70. However, some institutions might extend this limit up to 80 years old.

Deposit requirements

Foreigners can anticipate deposit requirements to fall between 20% to 50%. There can be exceptions, especially for Portuguese citizens who purchase from abroad.

Income source

Most Portuguese lenders are amenable to accepting almost all types of foreign income. The notable exception is for applicants residing in and earning income from countries facing international sanctions.

What documents are required for a foreigner applying for a mortgage in Portugal?

When planning to buy a property and secure a mortgage in Portugal, you must prepare the following documents: 

Personal Identification

  • Passport or other valid ID
  • Portuguese Fiscal Number (NIF)

Income and financial history

  • A report detailing credit liabilities from your home country
  • Most recent tax return
  • A letter from your employer specifying the contract type and duration of employment
  • The last three salary slips (or alternative evidence of consistent income for salaried individuals)
  • Proof of savings and any additional sources of income
  • Bank account summaries from the past six months
  • Payment records for any other loans over the previous half-year

Property-related documents

  • A copy of the Preliminary Purchase and Sale Contract (CPCV)
  • The official deed or land registration of the intended property

For self-employed people, you should present your firm's recent balance sheet and profit and loss statement. Retirees are expected to furnish evidence of their prior year's annual pension.

Which banks offer mortgages in Portugal to foreigners?

UCI, Millennium BCP, Novo Banco, and Banco PBI are among the Portuguese banks offering mortgage offers for people with income from abroad.

Lender Suitable for Pro Con
UCI self-employed applicants customers have the convenience of submitting the required documents in their original languages fewer product options than other banks
Millennium BCP mortgage applicants living and earning income outside the EU mortgages from 25.000 to 2.000.000 EUR minimum property price of 100,000 EUR
Novo Banco foreigners looking for a full remote banking fixed-rate and variable-rate mortgages tailored to your specific situation may lack competitiveness in specific loan categories, especially long-term
Banco PBI Portuguese expats living abroad and applicants living in the EU Loans up to 1,500,000 EUR an opening fee of up to 1.0%, which can increase the cost of securing a mortgage

Discover more banks that offer financing in Portugal for foreigners and learn about the best Portuguese mortgages.

What are the mortgage rates in Portugal in 2024?

Non-residents will almost without exception be offered a principal plus interest loan, meaning that you will need to start the loan repayment in addition to interest payments from day one. 

Interest-only mortgages are available by some lenders, but these usually only apply for new constructions and are limited to a 2-year timeframe, after which amortization of the principal begins.

Lender Interest rate
UCI 1.64% + Euribor 6m
Millennium BCP 0.85% + Euribor 6m
Novo Banco 1.1% + Euribor 6m
Banco PBI 1.65% + Euribor 6m

The cost comparison was made on April 15, 2024

When selecting a mortgage, evaluate your financial standing and risk appetite, weighing the possibility of rate hikes against consistent, even if higher, expenses.

Is there an easy option to access a mortgage in Portugal from abroad?

Buying a property in Portugal from abroad is simple now. Fortunately, solutions like Homevest make applying for and receiving offers from Portuguese banks straightforward and user-friendly.

  • Manage your application directly from your Homevest account, allowing you to track your progress 
  • Compare mortgage options and connect with top banks from Portugal to find your perfect match
  • No hidden fees. You don’t pay any fee, as Homevest receives a commission from the bank when the mortgage is completed

Tips to consider when planning to buy a property in Portugal with a mortgage

  1. Start your property search by conducting comprehensive research. Websites like Century21 and Era can be invaluable in helping you find a property that aligns with your needs. 
  2. Compare mortgage options. Use tools to compare different mortgage options tailored to your financial situation. Platforms like Homevest can streamline the comparison process and even expedite your application for a mortgage in Portugal from abroad.
  3. Mind the exchange rate. Since Portuguese mortgages are in euros, it's important to ensure you get the best exchange rate possible.
  4. Secure your NIF (Número de Identificação Fiscal) before exploring the property market. It's most convenient to acquire it via a tax representative or a lawyer.
  5. Always make sure your property and mortgage decisions align with your values and financial circumstances.

Sources used and checked in April 2024:

  1. UCI mortgages
  2. NIF number
  3. Banco BPI mortgages for foreigners
 

We recommend obtaining professional or specialist advice before taking or refraining from any action based on the content in this article. The information in this article does not constitute legal, tax, or other professional advice from Homevest Limited. Prior results do not guarantee a similar outcome. We make no representations, warranties, or guarantees, whether express or implied, that the content in this article is accurate, complete, or up to date.

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