How to obtain a mortgage in Portugal
as an American investor? A guide in 10 steps

1. Schedule a meeting with one of our brokers
   This first meeting lasts about 30 minutes. Here, the goal is to better understand your project and to run the first simulations.By the end of this meeting, you’ll know how the Portuguese banks will consider your situation, how much you’ll be able to borrow, under what conditions, the timeline…
2. Gather the documents needed to send your process to the bank
   At the end of the first meeting, your CAFIMO broker will have emailed you the simulations and a list of documents needed to present your situation to the bank.
3. Sending the process to the bank
   Whether you’ve already found your property or not, whether you’re in Portugal or not, our aim is to obtain approval (or pre-approval if you don’t have the property yet) from the banks’ decision-making department. Of course, at this stage, you are not bound to any bank we send your process to.
4. Presentation of approved conditions
   On average, 10 days after sending the application to the bank, we receive a response from the decision-making department.It’s important to differentiate simulations and approvals. Banks can play on the confusion of rules, especially with foreign investors, but your CAFIMO broker will always make sure to present you APPROVED conditions, not worthless simulations.

5. Opening an account
   There are different ways to open an account. We can arrange an appointment for you to open an account if you’re in Portugal or supervise the exchange of documents by email or post if you’re out of the country.It’s important to open your account at this stage, to save time once you’ve found your property.
6. If you haven’t found your property yet – Property search
   This is the ideal time to focus 100% on your property search. Thanks to the bank’s approval, you’ll know exactly how far the bank will go with you, and under what conditions. You can make offers that will be much more valuable to the seller because you already have your approval and your bank account open: you’re ready to move quickly on the next steps.
7. Appraisal of the property
   Since the bank is taking out a mortgage on the property you’re buying, they want to be sure of its value. In order to schedule this appraisal, you need to have an open bank account with the bank that has approved your application (hence the importance of step
8. The bank’s expert will contact the real estate agent or seller to arrange a time for a quick visit of the property.

9. Issuing final loan offers
   The approval presented in step 4 is based solely on your situation. However, in order to obtain your loan, the bank also wants to validate the property you are buying, through the appraisal.
   • If the bank’s expert considers that the purchase price of the property is coherent, the bank issues the final loan offers under the previously approved conditions.
   • If the appraised value is lower than the purchase price, financing may be reduced.
10. Organizing the notary’s deed
    Once the final offers have been issued, all that remains is to organize the notary’s deed. Alongside the real estate agent, bank, lawyer and all the other parties involved, your CAFIMO broker will remain present until the notary’s deed.Your lawyer can represent you through a power of attorney.

LTVs and Costs

The Italian banking system takes a uniform approach to foreign client purchases, financing up to a maximum of 50%—60% of the purchase price.

In the case of clients earning in US dollars, it is easier to reach 60% of the purchase price if the mortgage loan is granted in US dollars. In this case, the client benefits from avoiding the risk of USD/EUR exchange rate fluctuations. Clearly, when calculating the LTV, the bank must ensure that the appraisal validates a value equal to or greater than the agreed purchase price. If the appraised value is lower than the agreed price, 50%-60% refers to the lower of the purchase price and the appraised value. Conversely, even if you are getting a good deal and the appraised value is significantly higher than the agreed purchase price, the percentage financed would still relate to the purchase price. In some cases, especially/mainly for American citizens who also hold Italian citizenship, it is possible to obtain up to 70%.

The percentages mentioned above pertain to the purchase price and do not include closing costs such as taxes, Notary fees, Estate Agency fees, bank and brokerage costs, and language services. Therefore, a potential buyer must have 40% to 50% of the purchase price plus additional funds to cover the associated costs mentioned above. These costs can vary significantly based on several factors, including the features of the selected property. Generally, they range from 10% to 15% of the purchase price, with a lower percentage incidence for higher-priced properties. Having identified the property of interest and gathered some technical information, we will be able to quantify these expenses extremely precisely in any case.

Types of Properties

We can offer financing for residential properties, including holiday homes, as long as that they are kept in a good state of repair and fully compliant with all building, town planning and land registry (cadastre) regulations. Italian banks typically prefer to provide financing for real estate with purchase prices above €200,000. There are no upper limits on the purchase price and the mortgage loan that can be granted, provided that the financial requirements for accessing the mortgage loan are met and that the property has the features listed above.

Interest Rates

The interest rates offered always consist of a benchmark + spread. Currently, rates are available for mortgages in euros and US dollars, both fixed and variable, approximately ranging from 3.5% to 7%.

The reference parameters are listed below: