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How to buy a property in Portugal in 10 Steps

How to buy a property in Portugal in 10 Steps

Buying a property in Portugal can be a straightforward process if you plan in advance and prepare for any hurdles that may arise along the way. However, before you get started, there are many variables to take into consideration including whether or not your intention is to relocate your family, purchase a retirement home or a rental investment property to eventually retire to in the future.


Bearing in mind, depending on your personal circumstances, there could be more steps so this is a guideline on where to start:


1. First things first, work out your budget: In order to know what type of property you can purchase, you'll need to get your finances straight. Take a look and see what savings you have and then decide on how much you 're prepared to spend. Generally speaking, it is recommended that your budget should not go any higher than 35-40% of your net monthly income.


2. How are you going to buy your property? When buying property in Portugal there are two common ways to do so:

  1. To put it simply, in cash or as they say in Portugal, Pagamento a pronto. If you’re in a position to pay outright for your property, this is one of the quickest and most efficient ways to ensure your sale goes through. 
  2. Mortgage or financing: Obtaining a mortgage from a Portuguese bank is a more common way as banks can loan up to 40 years or 80% of the property value depending on your individual circumstances. If this is the route you choose, it's worth getting a mortgage assessment to see what loans are available to you which will help with step 1.


3. Where and what? In other words, what part of Portugal are you interested in and what type of property i.e a villa, townhouse, apartment or even a plot of land where you can then build a property that is suitable to your wants and needs.


4. Who are you going to buy with? Like most countries, Portugal will also have private sellers who choose not to work with real estate agencies, there’s also properties you can buy directly from the bank, developers themselves, or for ease, you can choose to work with an agent. Each offers their own sales conditions so it's best to do your own research and do what feels right for you.


5. Prepare a sight-seeing trip. Once you’ve decided on a budget, location, property type and how you're going to buy your property and with whom, the next step is to organise a trip to your chosen destination and property. From here, you'll want to scout the area, see what local amenities are available such as health care, schools, supermarkets and even chat with the neighbours where possible. They’ll be able to provide light on their own experience which can help massively. 


6. Make a proposal. We’re over halfway there! At this stage, you’ll have done all your research, chosen the property for you and now it’s time to put in an offer the seller can’t refuse. Also, if you’re getting financing, make sure your mortgage is in place and ready to go as this can delay the process if not. 


7. CPCV or agreement to buy. The CPCV is the contrato de promessa de compra e venda, or in English, promissory contract. This is the agreement to buy between the buyer and seller where a deposit is put down to secure the deal prior to signing deeds. It is worth noting that once you have put your deposit down, it is non-refundable unless there is an agreement in writing between you and the seller. Likewise, if the seller cancels unexpectedly, unless in writing, you are entitled to receive double your deposit back, so it is unlikely they will renege on the contract.


8. Deeds. Depending on your circumstances, you may be able to skip the step above entirely and go straight for deeds. Signing deeds is done at the local notary but before signing, you want to ensure all the property details and any outstanding mortgages/debts and all the necessary paperwork is up to date are included along with any taxes and expenses incurred due to the sale as the last thing you want is any unexpected hiccups.


9. Finalise any costs. This would entail the taxes and transaction fees relating to buying a property in Portugal. More known as IMT Property Transfer tax, VAT and Stamp Duty. There will also be costs for the notary, registering the translation with the Property Register and lawyer fees if you have used one along with mortgage costs if you opted for financing.


10. Update utilities. An important step, you’ll need to inform all electric, water, gas and potentially internet companies or any other service providers that you are now the new owner of the property so you can pay all the bills. 


All in all, by this point, you’ll be the brand new owner of your property in Portugal! There are a couple more things that may not be so prominent but are worth a mention such as keeping all your property documents somewhere safe so if you ever decide to sell again in the future you've got them to hand.


Over the last few years, real estate purchase in Portugal has increased by foreign buyers with Portugal recently coming in top for Best European country to purchase a second home in” and with the friendly team at Ideal Homes Portugal ready to help you with your property search should you choose to work with an estate agent, you couldn't be in better hands.