Mortgages on offer

Below you find details about the various mortgage types that are offered by the Portuguese lenders:

Acquisition mortgage

If you wish to purchase your dream home in Portugal our qualified advisors will provide you with the best possible financing solution that suits your criteria.

Mortgages for acquisition purposes are offered by all the major Portuguese lenders to private individuals purchasing a property with a habitation license.

The banks offer loan terms of up to 50 years for residents and 30 years for non-residents. The maximum age upon maturity of the loan is 70 or 80, depending on the lender.

The maximum borrowing varies from 60 - 80% of the acquisition price/valuation price, depending on the lender.

Acquisition mortgages are available on a variable rate or fixed rate basis.

The early redemption penalty for a variable rate acquisition mortgage is 0.50%. For a fixed rate acquisition mortgage the early redemption penalty is fixed at 2% during the fixed rate period, reverting to 0.50% thereafter.

For an indication of the monthly repayment cost please consult our mortgage calculator.

Construction loan

If you own a plot of land in Portugal or wish to renovate your existing property, we will assist you in obtaining the best possible conditions of a construction loan.

Constructions loans are offered to private individuals that own a plot of land with a valid, approved building project for habitation purposes. Most banks finance 100% of the construction cost and the funds will be released in various stages throughout the building process. The maximum term for the construction is generally 2 years during which the loan is on an interest only basis.

Equity release mortgage

Equity release mortgages are offered to clients that already own a property in Portugal and wish to release some funds from the property. In the current market environment it has become more difficult to release funds from your existing property and rates are higher than for a standard acquisition mortgage.

Mortgage transfer

If you have an existing mortgage facility in place we can analyse your current conditions and advice on benefits of other products.

A re-mortgage can be of interest if your current rate is higher than offered by other lenders or if you wish to amend the current loan term.

Please find more information on the following subjects:-

• Repayment options
• Interest rate options
• Lending criteria
• Required documentation
• Mortgage process
• Purchase and mortgage costs
• Mortgage calculator

Beating the exchange rate

At the time of writing this article the Sterling/Euro exchange rate is trading at 1.1225, this sterling weakness can be attributed to the lower than expected inflation figures that have just been released. The market now believes that is less likely that the Bank of England will raise interest rates at their next meeting. Generally speaking currencies appreciate if their respective base rates are increased.

This may not be good news for U.K based clients that are looking to buy a Euro denominated property with cash or had budgeted for their purchase at a higher rate (The high for 2011 is 1.2044).

Conversely this transpires to be good news for vendors who are looking to repatriate back to the UK as the exchange rate movement will allow them more scope to negotiate whilst still retaining their desired sale price.

The good news for buyers is that by using a locally based Portuguese mortgage you can mitigate up to 80% of that exposure and pay the mortgage off partially or in it's entirety at a later date when the exchange rate has moved to a more favorable position for you thereby making a potential foreign exchange gain on your purchase!

Partial and early redemption charges are capped at 0.5% in Portugal by law so you know with certainty from the outset as to what your exit charges will be when using this strategy.

Quinta Finance, 13.04.2011