So you want to buy a property in the Algarve, or anywhere else in Portugal. I've personally gone trough this entire journey and I wish someone wrote it all down for me at the time. 😉 So let's get down to business: this is how you buy a house in Portugal (for foreigners).
1. Finding the perfect house to buy
There are many real estate agents in the Portugal that can help you find the perfect property. They earn commissions over the property you buy through them. The same like it probably works wherever you're from. However, I like to just look on my own convenience and pace. So I personally just looked around at Idealista, a website and app where you can save your own segment of your own drawn area in Portugal. I found my beach flat trough this website and just contacted the selling real estate agent.
2. What you need to start off
NIF number
First things first, if you're serious about a house, you need a NIF number, a tax indication number. It's an ID needed for a person or a legal person in order to do any procedures that may have any relevance to the Portuguese tax system. This is about the first thing you need to have in order. I would not recommend figuring this out yourself but having your lawyer request the NIF number for you.
Lawyer (or solicitor)
I highly recommend getting a Portuguese lawyer from the concelho (municipality) you're buying you property in. A lawyer can help you with all the legal documents and guides you trough the entire (very bureaucratic) jungle of Portuguese house buying. 😉 Also, you can give your lawyer power of attorney so you don't have to fligh back and forth for every signature.
3. Financing and mortgages in Portugal for foreigners
The banks in Portugal (depending on your income of course) will grant you a mortgage of 70% of the value of the property. This means you need tot finance 30% yourself. I personally found it to be quite easy to qualify for a loan in Portugal compared to the Netherlands (where I'm from).
However the process of getting the loan in significantly harder and less smooth than I am use to. It's very bureaucratic and things just take a lot longer. So take my advice of working with a solicitor/lawyer when buying a place in the Algarve/Portugal, this really helps.
4. Chronological order of buying property in Portugal
Find a lawyer, even if you havent' found the perfect property yet. You only pay a percentage of the purchase amount at the end after the purchase is finalized.
Get your NIF number (trough your lawyer).
Do research on banks and their mortgage rates and inform on how much you can loan. They can do a simulation for you.
Open a Portuguese bankaccount (you can also do this when you've done the bidding already).
Make a bidding on the property (like everywhere).
Once the bidding is accepted, get back to your bank of preference for the mortgage.
The bank will do an evaluation - they're going to see what the property is worth. Good to know: if you're buying a new property that is not finished yet or still has to be developed, the bank can only do the evaluation once all the papers and documentation are in place. This is only after the building is finished.
After all is approved, you will have to get a life insurance at your chosen bank.
Sign the proposal - this usually is on sight before the official deed at the notary.
Finally, you can go and sign at the notary where you will receive the keys to your new house!
4. Tips from me
First off all, be patient! If like me, you're from a Western European country, you'll find things to go very slow. The Portuguese have a serious amount of Christian holidays and on these days everything is closed! It will be okay in the end but I shed some tears along the way. The bigger the reward at the end!
Don't do a fixer upper unless you live in the area yourself and/or have the time to be on sight regularly. Another option is to work with a construction supervisor.
Building a property takes much longer than you think. Add at least a year to the due date.
You can change everything but the location. Take this into account when determining where you want to be.
Finally, I hope this information helps you with the purchase of a house in Portugal! It's quite a journey but the reward is pretty amazing!