Financing

Once you have fallen in love with a property in Portugal, the question of financing may arise; is it better to borrow in your country of origin or in Portugal?

Both solutions are possible, and you are free to choose the least expensive solution. It is indeed easier to obtain financing in Portugal in 2017 than it was a few years ago.

However, we advise you to start your search by contacting your banker, who has a good knowledge of your personal financial situation. In general, the rates will be more advantageous there.

Your bank will nevertheless ask you for guarantees in France or Belgium, whether on your financial assets or on your already paid-off real estate in your country. Indeed, it will not take the risk of taking a mortgage on your property in Portugal.

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Be aware that many French banks are also represented in Portugal. In this case, it is the ideal solution! You can take advantage of the attractive interest rates in your country while using your property in Portugal as collateral. The banks well known in the French landscape are: CIC Iberbanco, BCP millenium, Caixa Geral depositos.

What are the interest rates and the guarantees required?

Banks in Portugal will generally ask you for a minimum deposit of 20%. The amount that the bank will grant you will be a maximum of 80% of the value estimated by the bank. Note that these estimates are generally lower than the purchase value! In fact, Portuguese banks have suffered greatly during the recession and now want to limit their risk at all costs! As a precautionary measure, you should therefore expect to have to pay 30% of the purchase price in addition to the acquisition costs (between 5 and 8% depending on the price of the property).

In the case of a bank repossession, the bank may agree to lend up to 100% of the sale price and with more attractive interest rates.

Regarding these interest rates, French or Belgian banks will generally offer you a fixed rate for financing your purchase.

In contrast, Portugal will offer you variable rates indexed to the Euribor (ECB lending rate). The loan therefore consists of 2 parts: the spread, which is the fixed part or, more simply, the bank's profit. Added to this is the variable Euribor, depending on your negotiation every 3, 6 or 12 months. At the moment, this rate is negative, so you pay less than the spread. However, this is a risk because this Euribor could rebound in the coming years!

Regarding the repayment period in Portugal, this can be spread over a period of 40 years. This obviously depends on the age at which you take it out...

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Finally, a loan in Portugal comes with a whole host of options that you will have to take out. Life insurance, the amount of which can be high depending on your age, fire insurance to be taken out through the bank, loan arrangement fees...