The key benefit of taking out a Portuguese mortgage is that the lender will carry out legal checks on the property and arrange for a valuation to take place.

Another benefit is that should you decide to let your property in short- or long-term contracts, your rental income in euros may offset or cover the mortgage payments in euros from your Portuguese bank, which naturally hedge any currency risk. Should you decide to use non-euro mortgage facilities abroad, you would be exposed to foreign currency risks.

Some other benefits of getting a mortgage include:

• Mortgages have low rates

• Foreigners with no residency in Portugal can still get a mortgage from Portuguese banks

• Properties purchased on credit can be rented out without restrictions.

• Mortgage installments rates are generally low

• What types of mortgages are available in Portugal?

• Fixed-rate mortgage

• The fixed-rate mortgage basically allows borrowers to pay a constant rate for a certain period. It generally guards you against fluctuations in the European base rate. This rate is usually agreed upon with the financial institution when requesting financing. For some lending institutions, this rate is fixed for the entire life of the loan while for some other financial institution it is usually for a certain period during the life of the loan. If the latter is the case of the rate, then it reverts to a variable rate mortgage. Also, if you decide on early repayment you may be charged a fine on repaid capital.

• Variable-rate mortgage

• With this type of loan, your monthly payment fluctuates depending on the indexer (the index that is normally used in housing loans is EURIBOR). Over the repayment period, the monthly payments are usually revised every six months based on Euribor rates. Also, if you decide on early repayment you will be charged 0.5% on the repaid capital.

• You should also know that the maximum loan-to-value mortgage in Portugal for non-residents is between 60% to 70% of the purchase price.

• There’s also the option for a construction mortgage. You can usually borrow 50% to 60% of the combined costs of the land and construction, however, these mortgages are complex and specialist advice from a mortgage broker is advisable.