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Important Financial and Mortgage Considerations

What should I expect to pay in taxes?

Taxes and Closing Costs: All property purchases in Portugal include a one-time stamp tax of about 8% of the purchase price, which is paid at closing. To cover all associated closing costs, including attorney fees, notary fees, and filing fees (excluding mortgage costs, which vary), you can round up to an estimated 10% of the purchase price. IMT & IS Simulator use this link to calculate your costs based on the purchase price. 

Mortgages in Portugal, what do I need to know? 

Key Mortgage Considerations for Foreign Buyers in Portugal

  • Age Limit: The maximum mortgage term is linked to the age of the oldest borrower, typically extending only until that person reaches 76 years old. Extensions are possible but rare.
  • Down Payment: Foreign nationals are generally required to provide a down payment of 20% to 30% of the property's purchase price.
  • Loan Amount and Evaluation: The bank's loan offer is strictly based on the property's professional valuation, not the sale price.
    • If the valuation is lower than the sale price, the borrower is responsible for covering the difference; this is not a basis for renegotiating the sale price.
    • While you can appeal a valuation, the bank's decision is final.
  • Income and Credit Requirements:
    • A minimum of three months of verifiable income is required before applying for a loan scenario or final approval.
    • Credit checks are mandatory. Applicants must download and share their credit report with the bank.
    • The bank assesses payment history and overall risk, but they do not use a credit score in the same way as in the United States.
    • Negative credit events (e.g., charge-offs, bankruptcies, debt consolidation, or missing payments) will significantly impact your eligibility.
  • No Pre-Approval Letters: Portuguese banks do not offer official pre-approval letters of credit. You can obtain a preliminary "scenario" showing potential qualification based on your finances, but a formal loan offer is only provided after you have selected a specific property.
  • Contingencies are Rare: It is extremely difficult to include contingencies in Portuguese contracts. Sellers rarely agree to a contingency for mortgage approval because signing the contract immediately removes the property from the market. If the mortgage is not approved, the seller loses a substantial amount of time to sell the property.

What about Currency Exchange and Transferring Money? 

It’s essential to be thoroughly prepared for your property purchase in Portugal. A critical aspect of this preparation involves meticulous planning for the transfer of funds and the execution of currency exchange. This financial foresight will significantly streamline your buying process.The Down Payment and Fund Transfers


The down payment for your property in Portugal does not have to originate from a Portuguese bank account. You have the flexibility to arrange for the funds to be sent directly to the seller from an international source. Common methods for this include utilizing a reputable currency exchange broker or arranging a direct international wire transfer from your existing bank.International Wire Transfers: Planning and Timing

When initiating transfers from banks outside of Portugal, particularly from institutions in the USA, be aware that the transfer process can often take multiple business days to complete. It is crucial to plan this well in advance of any deadlines. You must contact your bank directly to:

  1. Confirm that they facilitate international transfers.
  2. Inquire about their specific procedures, associated fees, and, most importantly, the estimated timing for the transfer to be completed and the funds to be available.

A note of caution: Some financial institutions in the USA, such as many local credit unions, do not offer international transfer services. It is absolutely necessary to verify your bank's capabilities before you commit to the purchase process or assume a particular transfer method will be available to you.Portuguese Bank Account Requirement

While you do not need an active Portuguese bank account to start the initial purchase process (e.g., signing a Promissory Contract or making the initial deposit), it is a mandatory requirement for the final stages. Specifically, for the final deed (Escritura) and the closing payment, you must have an active, operational bank account with a Portuguese institution. The final payment for the property closing will be processed and drawn directly from this local bank account.Best Practices for Large-Sum Currency Exchange and Transfers

Transferring substantial sums of money across international borders requires an extremely careful and professional approach. It is highly recommended that you engage the services of a specialized currency exchange broker. These professionals offer several benefits:

  • Better Exchange Rates: They can often secure more favorable Euro-to-currency exchange rates than standard banks.
  • Reduced Fees: Their fee structure may be more advantageous for large transfers.
  • Expert Guidance: Having experienced professionals involved ensures compliance and proper execution, mitigating risks.

A critical warning regarding digital transfer services: It is strongly advised against using digital online payment or transfer services (such as Wise, Revolut, PayPal, etc.) for very large transfers, especially the final closing payment. While these services are excellent for small, day-to-day transactions, if an issue, delay, or technical error occurs with a large transfer, securing timely and effective customer support or resolution can be exceptionally difficult and often protracted. For the security of your major investment, stick to established, professionally managed bank wires or dedicated currency brokers for all significant sums.