Portugal Property

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Portugal Property: Buying Property

Date: 16/9/2008

Property in Portugal attracts lovers of long sandy beaches and world class golf, while easy accessibility via budget flights as well as year round sports activities all contribute to Portugal's success. Poperty purchasers seeking an alternative to France or Spain are finding Portuguese real estate is lower in price, while bargains are to be picked up in the mini emerging markets of rural paradises north of Lisbon.

The property purchase process in Portugal is quite straightforward and there are no real restrictions on foreigners buying property in Portugal, even if they are not living in the country.

Once a property has been decided upon and your offer accepted, a trusted local lawyer should be employed to help with all dealings, documentation and translations.

A sales contract is prepared, along with the terms of purchase and a deposit of about 10% of the purchase price is paid.

Once everything has been checked over and affirmed by the lawyer the signing is carried out by the buyer and seller. Once this is complete, the documents are notarised and the sale can be completed in full, with all outstanding fees paid, and the property is registered with the local Land Registry.

Payable fees include applicable lawyer, estate agent and notary fees. Other taxes and costs may be incurred on top of these charges.

It is wise to set aside 15% on top of the purchase price to cover transfer taxes, notary fees (2.5% of property price), stamp duty, mortgage arrangement fees and surveyor's fees. Legal fees are normally set at between 1 and 2% of the property price. A power of attorney will set you back a further approx. 200 GBP if you are unable to be present for the Act of Sale.

If you are building a property, 17% VAT is chargeable on all your building materials and builders' costs.

Should you be purchasing property in Portugal that you do not intend to live in permanently, the Portuguese law requires you to nominate a fiscal representative (your lawyer or a good friend) to receive your correspondence from the Portuguese tax authorities.

Mortgages are available for foreigners in Portugal to fund between 60 and 80% of the property price. These will vary according to bank and your particular financial background. Both repayment and interest only mortgages are widely available with fixed and variable rate options. Currently interest rates in Portugal are low, at around 3.40% (2007).

The maximum loan term spans 30 years and the minimum loan value is set at 20,000 GBP. Lenders will not normally take into account rental income when calculating an applicant's level of borrowing. Source: Portugal Property Page

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