Portuguese mortgages for non-residents

What are non-resident mortgages in Portugal and how to apply.

Non-resident mortgages in Portugal
Non-resident mortgages in Portugal / Gtres
20 May 2021, Redaction

With the increase in teleworking as a result of the coronavirus pandemic, the number of people interested in moving to Portugal in search of a better climate and lifestyle has increased. As a result, there has also been an increase in requests for housing loans for non-residents in Portugal. What are these bank loans, what are their characteristics and how can you apply for them? We answer these question about Portuguese mortgages for non-residents with the help of specialists.

Usually, property investment in Portugal by foreigners is centred on second homes, situated above all in coastal areas or islands, thanks to the good temperatures, both for personal use and for investment. It is true that travel restrictions and the drastic reduction in tourism caused by the COVID-19 pandemic has had a strong impact on this type of transactions. However, as life begins to slowly get back to normal with some restrictions being lifted, together with the start of the spring-summer season, when there are usually more transactions, a reactivation of purchases by non-residents is expected in Portugal.

According to Miguel Cabrita, who is in charge of idealista/créditohabitação in Portugal, it is expected that "the coming months will reflect a strong recovery of these types of purchases with more non-residents applying for mortgages in Portugal. The offers differ from bank to bank, both in terms of the conditions offered and the service available to non-residents, so the most important thing, as always, is to compare different personalised offers and decide freely on the option that best suits your own needs," he adds.

Cabrita also stresses that there are banks that are clearly committed to this type of client, given that in the majority of cases foreign buyers seek lower financing in relation to the value of the property and also have effort rates that are lower than the national average.

Characteristics of mortgage loans for non-residents in Portugal

What is a non-resident mortgage? This type of loan is aimed at people who do not live in Portugal, regardless of whether they have Portuguese nationality or not, and who want to buy property in the country, although a person who lives in Portugal but pays taxes in another country is also considered a non-resident. In other words, the criterion that defines the type of credit is your fiscal residence, not your nationality.

These mortgages for non-residents are identical to those which can be offered to resident citizens, although the conditions are more restrictive in terms of risk criteria (especially when it come to the percentage of financing); i.e. by applying for a mortgage in Portugal as a non-resident, you won't get as much money as a resident.

Mortgage loan conditions for non-residents in Portugal

The first thing to bear in mind is that banks in Portugal apply more restrictive criteria for non-resident clients, usually reducing the maximum percentage of financing.

In general, banks apply a limit of 90% of the purchase price or the value of the property for resident clients in Portugal. In the case of non-residents, the financing percentage is usually reduced to 70% or 80%, although 90% financing is possible for Portuguese people buying a property to return to live or work in Portugal, as they are considered future residents in Portugal and their fiscal residence will be in Portuguese territory.

According to specialists at idealista/créditohabitação, "each bank defines different risk criteria that are not only limited to the client's profile, but also their country of residence". For example, banks generally do not usually accept guarantors or mortgage guarantees that are located outside Portugal, due to their inaccessibility. In this case, a foreign client would have to accept a lowe level of financing. 

How to apply for a non-resident mortgage in Portugal?

As with "normal" mortgages, the application for a loan for a non-resident can be made directly with the banks, or by using the service of a credit intermediary.

Some of the documents you will need to present in order to apply for this type of housing loan are

  • A copy of your identification document or passport;
  • 3 most recent payslips from your country of residence;
  • Annual income tax statement for the last financial year;
  • Bank statement with account movements from the last three months.

Take note that all of your documents will also need to be officially translated to Portuguese, while these official translations may also require a Hague Apostille: the Apostille is attached to your original document to verify it is legitimate and authentic and is often a vital element for a document to be accepted other countries. Therefore, the best advice is to check with the bank which documents are needed beforehand and if official translations and the Apostille are required.

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