Mortgage in Portugal for non-residents. Your 2024 guide

Moving to Portugal wasn't as hard as my family and I anticipated. Still, there are some things I wish we knew before taking this big step. 

Keep reading to learn which specific documents you need to take out a Portuguese mortgage, the current interest rates, and how to simplify your mortgage experience.

What are the main requirements for mortgages in Portugal for non-residents?

Living here for almost two years before buying a proper home was a wise decision. It also helped us overcome some hurdles when buying a home with a mortgage.  

We also learned that getting a mortgage in Portugal as a non-resident involves several important factors. 

Good credit score

First, having a good credit score greatly increases your chances of approval. It's also essential to have a stable income or a full-time job with a secure income, as this will help your application. 

For self-employed people like me, showing a clear history of regular income was absolutely necessary.

Portuguese tax number

A crucial part of the process is obtaining a Portuguese tax number (NIF).

Also, a Portuguese bank account can simplify transactions and save on currency conversion fees since mortgages are only given in euros.

Property documents

You will also need specific property documents, such as the energy certificate (if there is one), land registry document (Caderneta Predial), and proof of payment for the stamp duty (Imposto de Selo). 

And while you don't need to be a resident to buy property in Portugal, residency might be necessary if you plan to stay for extended periods.

How do mortgages in Portugal work?

There are many types of mortgages available in Portugal. Most Portuguese people get a variable-rate mortgage, although that trend is changing a bit. 

As in most other countries, there are also mortgages with a fixed interest rate or those with a mixed interest rate, where the first 5, 10, or 15 years have a fixed rate, and the rest of the mortgage has a variable rate. 

For non-residents, the repayment term is typically between 5 and 30 years, with a loan-to-value (LTV) ratio of 75-80%.

If you want to go a different route and buy land or buy a property to let, buy-to-let mortgages are available in some Portuguese banks, even for non-residents.

What are the interest rates for mortgages in Portugal in 2024?

“Banks roll out new offers each week. What's best for one client might not suit another. It all comes down to each person's financial situation and needs,” says Reorganiza, Portugal's leading mortgage broker.

According to the Bank of Portugal, the average interest rate for mortgages in May this year was 3.71%. That's slightly less than in April 2024 (3.74%) or a year ago in May 2023 (4.13%). 

Mortgage rates have been falling since September 2023, when they were 4.27% — the highest since January 2012 (4.68%). 

What documents should a non-resident prepare for a mortgage in Portugal?

First, you'll need proof of identity, which can be your passport or a photo ID card. To prove your current address, you can use a signed housing contract, utility bills, or a tax statement.

If you're employed, you'll need to show proof of employment by providing a copy of your current employment contract. 

For self-employed people, you should have a copy of your company accounts, bank statements from the past six months, and your latest tax return.

From my experience, you also must provide bank statements from at least the previous three to six months. Some lenders might also ask for a reference letter from your bank. 

Which Portuguese banks offer mortgages for non-residents?

Is there a way to speed up getting a mortgage in Portugal from abroad?

From my experience, Portuguese banks are no better or worse than banks in other countries in the Western world. They like to get a clear picture by looking at your documents. 

To make your life easier, take all the mortgage documents with you if you're going in person. Be prepared to wait in long lines, as many Portuguese people love doing things in person.

If you're doing things online, finding the best lender is best done through a service like Homevest. Whether in the UK, Ireland, or the United States, you can request and compare mortgage offers from Portuguese banks via Homevest.

You can upload the required documents for your credit to your account. A broker will verify them and send them to the eligible Portuguese banks for your profile.

It's a user-friendly and efficient digital platform, allowing you to manage your application and track its progress directly from your Homevest account​.

Are there any tax implications for non-residents with a mortgage in Portugal?

Yes, there are several tax considerations when buying a Portuguese property as a foreigner. 

For instance, if you sell your property, you are subject to a capital gains tax at a flat rate of 28% on the profit from the sale. There are some exceptions to that, like if it's your primary residence.

Under a recent law, skilled non-residents who become tax residents in Portugal might qualify for the NHR regime. This regime offers big tax benefits for up to 10 years, including exemptions on foreign income and a flat 20% tax rate on Portuguese-sourced income.

On the flip side, some non-residents could face double taxation on rental income and capital gains unless there is a double taxation treaty between Portugal and their home country. 

For all legal and taxation concerns, you should ask a capable tax adviser, lawyer, or agency, many of which are available in Portugal. 

Frequently asked questions

1. How much can I borrow for a mortgage in Portugal?

The amount you can borrow typically ranges between 70 to 80% of the property's purchase price. This means you'll need to make a down payment of at least 20-30% of the property value.

2. What is the debt-to-income ratio for a mortgage in Portugal?

The debt-to-income (DTI) ratio for obtaining a mortgage in Portugal is generally set to ensure that your total monthly debt payments, including the new mortgage, do not exceed 30-35% of your monthly income after taxes.

3. What is the maximum mortgage age in Portugal?

Most banks in Portugal offer a maximum mortgage term of 50 years for residents and 30 years for non-residents. Your maximum age by the end of the mortgage term should typically be 80 for residents and 75 for non-residents.

4. Do you need life insurance for a mortgage in Portugal?

Yes, life insurance is often required when acquiring a mortgage in Portugal. 

Most Portuguese banks require borrowers to take out a life insurance policy as a condition of the mortgage.

5. Do I need a solicitor to buy a house in Portugal?

While it is not a legal requirement to use a solicitor when buying a house in Portugal, it is highly recommended. We certainly had one.

Sources used and checked in July 2024:

1. Bank of Portugal 
2. Bank of Portugal
3. Goldcrest
4. UCI
5. Benzinga

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.