Is it necessary to have a down payment to get a mortgage in Portugal?

Movingto Editorial Team
December 18, 2022

If you're looking to secure a mortgage in Portugal, one of the primary considerations is the down payment. In the world of property financing, a down payment is a crucial aspect that can impact your ability to get a mortgage. In this guide, we'll explore the importance of down payments and its necessity in the Portuguese property market.

The Concept of a Down Payment

A down payment is the initial, upfront portion of the total cost of a property that you pay out of pocket when securing a mortgage. This amount is typically expressed as a percentage of the total property price. A larger down payment could lead to more favorable mortgage terms.

Do You Need a Down Payment to Get a Mortgage in Portugal?

The short answer is yes; most lenders in Portugal require a down payment to secure a mortgage. This is to ensure that you have a personal stake in the property and are less likely to default on the mortgage. The exact amount needed varies but typically falls between 10% and 30% of the property's purchase price.

The size of the down payment can also affect the terms of the mortgage, such as the interest rate and fees. A larger down payment may result in a lower interest rate and lower fees, while a smaller down payment may result in a higher interest rate and higher fees.

It is a good idea to carefully consider your financial situation and budget when deciding on the size of your down payment. You may also want to seek the advice of a financial advisor or mortgage broker who can help you understand your options and make an informed decision.

The Role of Down Payment in Mortgage Approval

The size of your down payment can significantly impact your chances of mortgage approval in Portugal. Here's how:

  1. Reduces Loan-to-Value Ratio: A higher down payment reduces the loan-to-value ratio, which lenders prefer as it decreases their risk.
  2. Lowers Monthly Payments: The more you pay upfront, the less you'll need to borrow. This, in turn, reduces your monthly mortgage payments.
  3. Potentially Better Interest Rates: A larger down payment could help you secure more favorable interest rates.

In summary, while a down payment is typically necessary to secure a mortgage in Portugal, the amount required can vary based on multiple factors. It's recommended to consult with a mortgage expert who can provide tailored advice based on your specific circumstances.

Need more assistance in navigating the Portuguese mortgage landscape? Contact our team at Movingto for personalized guidance and support. We're here to make your home buying journey in Portugal as smooth as possible.

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