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Investing in property in Portugal - what do investors need to know?

Portugal continues to be one of the most popular destinations for Brits to holiday and have second homes, thanks to its excellent weather, high levels of safety and its relaxed, often slow-paced way of life.

But, from an investment point of view, what does it offer?

Here, we spoke to two experts from Ideal Homes Portugal - Chris White, chairman and founder of the firm, and Jose Mendonça, mortgage adviser at the company - for their thoughts. 


What does Portugal have to offer investors in terms of property types and potential yields?

CW: There are many properties, from apartments to villas, to entice investors. Potential yields depend on the type of property, area, facilities available, etc. Some investors only buy property where they can rent the whole year. Others only look to rent for a specific number of weeks per year.

Currently, Lagos is a very popular area to invest in. As an example, the Santa Maria 2 Apartments, which are just two minutes’ drive from the beach, are attracting investors who want to rent their property out for as many weeks as possible in a year (usually 25-30). Yields can vary from €20,000-€28,000 depending on the number of bedrooms and views.

Loulé is also on investors’ radars right now. The town offers excellent value, with a block of four apartments costing just €675,000. The combination of apartments (two studios, a one-bedroom and a four-bedroom) provides plenty of potential for earning both year-round income and taking advantage of the earning potential of the peak holiday season.

What kind of mortgage rates can investors hope to achieve in Portugal?

JM: We are currently achieving rates from 0.7 to 0.8% (variable rate). Overseas investors can borrow up to 80% of the property’s valuation, with mortgage options available for up to 40-year terms.

How easy is the borrowing process in Portugal for residents of other countries?

JM: The process is fairly easy, as long as you have all the documents and share the most accurate information throughout the process. Ideal Homes Mortgages helps simplify the process, as you deal with one person and they in turn deal with all the banks to get a better rate. That can save quite a bit of time and hassle.

Is there a wide range of mortgage products in Portugal aimed specifically at investors?

JM: The process in applying for a mortgage is the same. You will indicate the reason for purchasing but there are no separate rules for investors when applying for a mortgage in Portugal.

Are investors eligible to apply for a Golden Visa when they buy property in Portugal and are there any restrictions around property types or locations?

JM: You can't get a mortgage for the initial investment for the Golden Visa; you need the minimum investment amount in cash already. You can only mortgage the additional amount if you want to be eligible. For example, if you invest in a property worth €500,000 and you want a Golden Visa, you need to have €500,000. But if the property you are looking at is €800,000, you can look at mortgaging the additional €300,000 after the minimum investment amount.

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    Higher yields are obtainable from the rental market in many of Portugal's rural areas where holidaymakers, nomads and residents are choosing to stay, work and live.

    Opportunities are not Algarve-centric where high property prices serve to lower yield. Lisbon's short-term rentals are down 50-60% but are growing in rural Portugal.

    Changes in the Golden Visa scheme have turned investors' attention inland.


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