Buying a Property in Portugal
Portugal has become an increasingly popular destination for both working and retired expatriates with many more choosing to buy properties rather than renting. Below is a guide to the main steps in purchasing a property in Portugal designed to make the process run as smooth as possible:
PROFESSIONAL HELP AND ADVICE
The bureaucracy involved in buying is complicated so it is important to seek independent representation and advice.
ARGENT International has a team of multi-lingual consultants that are able give you advice on the financial side of purchasing such as your monthly mortgage repayments and the purchase fees involved. They can also arrange your mortgage finance “in principle”, meaning you will be able to find out exactly how much you can borrow, before agreeing to purchase the property, or before signing any contracts and paying over a deposit.
START HOUSE-HUNTING
Once you have decided the type of property you wish to purchase and the area in which you wish to live, the house hunting begins. Always check that the estate agents you deal with are licensed and registered.
MAKING AN OFFER
Once you have found a suitable property, make an offer directly to the estate agent. If it is accepted, you must make a down payment and sign the deposit or reservation contract.
CHECKING THE HOUSE BACKGROUND
Before formalising the purchase you should check a number of items related to the house as to safeguard the operation. Solicitors will conduct all searches and verifications and will obtain all necessary documents and make sure everything is in order. Make sure that the vendor or builder has a “Certificate of Habitation” for the property as you will need this when you wish to connect electricity, gas and telephone as well as producing it to the notary if you wish to sell the property in the future.
APPLYING YOUR MORTGAGE
Your Argent International mortgage adviser will help to find the best solution on the marketplace to suit your mortgage needs. If you already have an “agreement in principle” in place then you then you will not have to wait for a loan approval before moving onto the valuation.
ARRANGING HOUSE VALUATION
The mortgage lender will send out its own valuer to find out if the property is worth the amount you have agreed to purchase it for. It also helps you guarantee that the purchase price is correct and you are not paying too much. Before proceeding with the purchase, ensure an independent valuation of the property is carried out, which should point out any problems with the property – i.e.: subsidence, damp, wiring defects - and could also possibly highlight any boundary disputes, etc.
ADDITIONAL FEES
House valuation
Land registry fees
Notary fees
Solicitor fees
TAXES
a) IMT – Imposto Municipal sobre Transmissões : The transfer tax depends on the value of the property.
b) STAMP DUTY
Stamp Duty is 0.8% of the declared amount of the sale, payable to the notary; 0.6% of the mortgage, withheld by the bank; 0.4% of the process opening fees.
CONVEYANCING
After the solicitor has checked the legal title and made the appropriate searches, he will arrange Conveyancing in a notarial deed. The solicitor will also check that the previous owner has paid all Property and Capital Gains Taxes and Owners’ Association contributions. If you wish, you can also request further searches, such as checking due payment of basic utility bills.
INSURANCE
You are obliged by law to make Multi-Risk Insurance (Buildings and Contents Insurance) on the property, naming the entity that grants the loan as beneficiary of the insurance. You are also recommended to take out adequate Life Assurance. Argent International has an independent insurance arm designed to provide the most adequate and cost effective insurance on the marketplace.
HOUSE BUYING TIPS
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Never sign a contract that you do not understand (for example - if it is in a foreign language).
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Always ensure that you seek specialist advice from independent Solicitors, Architects and Surveyors before considering a purchase overseas. They should be proficient in your chosen country's laws and processes and also know the specifics involved in buying a property there.
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Ensure you do not inherit a debt on the property before you purchase, which a solicitor should be able to check.
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Always give yourself a `cooling off` period if you see a `must-have property` and are tempted to put down a deposit there and then.
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Check with the estate agent or vendor that you are aware of the costs charged by the legal and government authorities for purchasing a property in your chosen country.
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Try to arrange your mortgage in the currency that you earn in where possible, unless you are going to receive rental income from that property in the local currency and then this may be a possible alternative option, dependent on the lender's criteria.
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Open a bank account in your chosen country and ensure you get a Certificate of Importation for the money you bring in from your home country.
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Set up standing orders in a local bank account to meet bills and taxes. Failure to pay your taxes in Portugal could lead to court action and possible seizure of your property.
Disclaimer
The information provided on the site is indicative only and does not form part of any contract. Any advice should be seeked after qualified legal professionals. Currency equivalents are indicative only and should be checked with your bank. |
