If you’re planning to buy property in Portugal, you’ve likely come across the term TAEG while researching mortgages. But what exactly does it mean, and why is it important for you as a foreign buyer?
In this article, we explain what TAEG is, how it affects your mortgage in Portugal, and what you should check before signing your mortgage agreement.
What does TAEG stand for?
TAEG stands for “Taxa Anual de Encargos Efetiva Global”, which translates to Annual Percentage Rate of Charge (APR) in English. It is a standardised indicator that shows the total cost of your mortgage per year as a percentage of the loan amount.
TAEG helps you compare different mortgage offers easily, as it includes not only the nominal interest rate but also additional costs such as:
- Bank commissions and processing fees
- Mandatory insurance (e.g., life and home insurance)
- Administrative costs associated with the mortgage
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Why is TAEG important for foreign buyers?
Many foreign buyers focus solely on the mortgage’s interest rate when planning their investment in Portugal. However, the interest rate alone does not reflect the real cost of your mortgage.
TAEG gives you a more transparent overview of the true annual cost, helping you:
- Compare mortgage offers from different banks more accurately
- Understand your total financial commitment beyond the advertised rate
- Budget your investment properly and avoid hidden costs
How is TAEG calculated?
The TAEG is calculated by taking into account:
- The nominal interest rate (spread + Euribor)
- Commissions and fees charged by the bank
- Costs of mandatory insurance
- Other obligatory costs you must pay to obtain and maintain the mortgage
When getting a mortgage in Portugal as a foreigner, remember that TAEG does not include costs not directly related to the mortgage, such as notary fees or IMT (Property Transfer Tax).
For example, a mortgage with a nominal interest rate of 3.5% may have a TAEG of 4.1% once all costs are included, giving you a clearer view of your annual financial commitment.
What is a good TAEG in Portugal?
TAEG values in Portugal vary depending on:
- The bank’s spread
- The mortgage term
- Whether you take additional products (e.g., insurance with the bank)
In 2025, TAEG values typically range between 3.8% and 5.5%, depending on your profile and the mortgage type (fixed or variable rate).
It is essential to request TAEG information from different banks when comparing offers. By law, Portuguese banks are required to provide this figure clearly in your mortgage simulation documents.
Tips for foreign buyers considering a mortgage in Portugal
- Always request a mortgage simulation including TAEG before making any decision.
- Check what is included in the TAEG (insurance type, fees, commissions).
- Compare TAEG between banks, not just the interest rates.
- Ask a mortgage adviser to clarify any additional costs not included in the TAEG.
Final thoughts: TAEG helps you make informed decisions
Understanding TAEG is crucial when buying property in Portugal with a mortgage. It allows you to see the real cost of your loan and helps you avoid surprises in your budget planning.
If you need support obtaining a mortgage in Portugal or want to understand how TAEG will affect your property investment, consider working with an experienced mortgage broker familiar with the needs of foreign buyers.
If you are looking for property for sale in Portugal, we're here to help with thousands of homes across the Algarve, Lisbon, Porto, and beyond. When you’re ready to arrange your financing, you can easily compare mortgage offers and get guidance using idealista’s mortgage broker service in Portugal, which is free to use and helps you find the best conditions for your investment.
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