Portugal: Mortgage notes

Guidance notes for purchasing a property in Portugal

1) Please ensure that you will have full title to the property on completion and that the "copia simple" is available for the bank. Other documents such as the official plans of the property, a plan of the site and a copy of the caderneta predial, fiscal numbers and certidao de encargos may be required before the lender is able to carry out a valuation. These documents are usually available from your solicitor.

2) With new properties, find out the date the property will be registered in your name(s), as the lender cannot lend on the security of the property until it has been registered.

3) Whilst all reasonable steps will be taken to secure the loan on your overseas property as soon as possible, delays may occur due to the Portuguese legal and administration system.

4) Check with the estate agent/lawyer that you are aware of the costs charged by the legal & government authorities for purchasing a Portuguese property i.e. SISA Tax is normally charged on the ‘Declared Price’, noting that the lender will have their own legal costs for assigning the loan (the cost of which they will normally advise when they issue the mortgage offer).

5) It is essential that you take the appropriate independent legal advice before signing the sales contract or paying a deposit, if purchasing a foreign property, as would be expected if you were purchasing in your own country. The bank will require a copy of this document to be forwarded with the relevant application form. However you are able to sign this contract with the clause “subject to mortgage finance” as the contract, once signed is legally binding.

6) Please be aware that the Notaire may be incorporating within his charges, costs for assigning the mortgage and you should establish with the Notaire the actual cost before proceeding with a loan application

7) It is advisable to arrange your mortgage finance before agreeing to purchase a property.

8) Mortgages may have to have a suitable life assurance policy assigned to the lender.

9) Properties can be purchased in either individual or joint names or in the name of an offshore company (with personal guarantees).

10) A Portuguese bank account will be required.

11) Please note that the following approximate charges are made by the Lender to complete the mortgage (which are standard in Portugal):

PREDIAL REGISTRATION: FOR THE PURCHASE - € 125; FOR THE MORTGAGE - € 135
NOTARY REGISTRATION: FOR THE PURCHASE - € 175; FOR THE MORTGAGE - € 142

There are also stamp duties due of approximately €8 per €1,000 borrowed if a purchase, or approximately €5.50 per €1,000 borrowed if a re-mortgage.

© Conti Financial Services Limited 2006

This article is reproduced with the kind permission of Conti Financial Services Limited.

For information and advice on overseas mortgages and residential finance in over 30 countries, contact Conti Financial Services Ltd on +44 (0) 1273 772 811 www.mortgagesoverseas.com