General Mortgage Basics in Portugal

Considering purchasing property in Portugal, particularly in the picturesque Madeira region? Understanding the mortgage landscape is crucial.

This guide addresses common questions about mortgages in Portugal, providing clarity for both residents and international buyers.

Types of Mortgages Available in Portugal

Portugal offers various mortgage options to suit different needs:

• Fixed-Rate Mortgages: Interest rate remains constant throughout the loan term, offering predictable monthly payments.The Irish Sun+35movingto.io+35UCI+35

• Variable-Rate Mortgages: Interest rate fluctuates based on the Euribor index, potentially leading to lower initial rates but with the risk of increases over time.

• Mixed-Rate Mortgages: Combine fixed and variable rates; the loan starts with a fixed rate for a set period, then switches to a variable rate.

Can Foreigners Obtain a Mortgage in Portugal?

Yes, non-residents can secure mortgages in Portugal. Lenders typically offer up to 70% loan-to-value (LTV) for non-residents, while residents may access up to 90% LTV.

Loan-to-Value (LTV) Ratio

The LTV ratio represents the loan amount compared to the property's value. For non-residents, LTV ratios usually range between 60% and 70% and sometimes 80%. 

Mortgage Term Length

Mortgage terms in Portugal can extend up to 40 years, depending on the borrower's age.

• Up to 30 years old: Maximum term of 40 years.

• 30 to 35 years old: Maximum term of 37 years.

• Over 35 years old: Maximum term of 35 years.

Minimum Deposit Required

Non-residents are generally required to provide a minimum deposit of 20%- 30% of the property's purchase price.

Current Interest Rates

As of 2025, average mortgage interest rates in Portugal are:

• Variable-rate mortgages: Approximately 3.5%.

• Fixed-rate mortgages: Approximately 4%.

Rates may vary based on the lender, loan amount, and borrower's financial profile.

Fixed vs. Variable Rates

• Fixed Rates: Offer stability with consistent payments but may start higher than variable rates.

• Variable Rates: Start lower but can fluctuate with market conditions, affecting monthly payments.

Choosing between the two depends on your financial situation and risk tolerance.

Mortgage Pre-Approval

Obtaining a mortgage pre-approval is advisable. It provides an estimate of the loan amount you qualify for, helping streamline your property search.

Life Insurance Requirement

While not legally mandated, most Portuguese banks require borrowers to have life insurance covering the mortgage amount. This ensures loan repayment in the event of the borrower's death. 

Age Limit for Mortgage Applicants

Applicants must be at least 18 years old. The mortgage term should conclude by the time the borrower reaches 75 years of age. 

Whether you're a resident or an international buyer, being informed will help you make confident decisions in your property investment journey.