Mortgage Financing for Foreigners in Portugal: Is It Possible to Finance a Property Purchase?

One of the most common questions among foreigners looking to buy property in Portugal is whether they can obtain mortgage financing.

The answer is yes.

Both residents and non-residents may qualify for mortgage loans, although the conditions vary depending on the buyer’s profile.

Financing for Residents

As a general rule:

• Up to 90% of the purchase price for a primary residence;
• Between 70% and 80% of the purchase price for a secondary residence or investment property;
• Loan terms of up to 40 years (depending on the borrower’s age, with a maximum age limit of 75 years at loan maturity);
• Variable, mixed, or fixed interest rate options;
• Assessment of the borrower’s financial capacity, whether income is generated in Portugal or abroad.

Financing for Non-Residents

Typically:

• Between 70% and 80% of the property’s purchase value, whether for a primary or secondary residence (investment purposes);
• More extensive documentation requirements;
• Assessment of the borrower’s financial capacity, whether income is generated in Portugal or abroad.

Associated Costs

In addition to the down payment, buyers should consider:

• IMT (Property Transfer Tax);
• Stamp Duty;
• Notarial deed costs;
• Registration fees;
• Bank valuation fees;
• Bank commissions and any financial products that must be maintained throughout the mortgage term.

The Role of Legal Assistance

Before entering into a long-term financial commitment, it is advisable to have both the property’s documentation and the mortgage financing documentation reviewed by an experienced legal professional.

Mortgage approval generally occurs in two stages: an initial financing estimate, in which the bank issues a preliminary proposal, and a final approval issued after the property valuation has been completed. For this reason, when signing a Promissory Purchase and Sale Agreement (CPCV) based solely on the initial financing proposal, it is essential to include contractual provisions that protect the prospective buyer and any deposit already paid if the bank later changes the financing conditions following the valuation.

The property valuation and the bank’s final financing proposal are critically important because the loan amount is typically calculated based on the lower of either the property’s purchase price or the bank’s valuation.

This detail alone may make the transaction financially unfeasible. If the Promissory Purchase and Sale Agreement does not adequately protect the buyer’s rights, the buyer may risk losing the deposit paid to the seller should the financing ultimately not be approved under the expected conditions.

These and other important details should be carefully reviewed by a qualified professional to safeguard the rights and obligations of all parties involved.