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Tuesday, September 12, 2023

[New post] Buying a house in Portugal as a foreigner – a mortgage affair

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Buying a house in Portugal as a foreigner – a mortgage affair

Algarve Lifestyle

Sep 12

If you are new to this story - see the previous parts here

If you like video content, just listen to the video above.

Getting in touch with a mortgage broker

I was started to send emails to the brokerage firms in Portugal, firms that are helping foreign people obtain credits from the Portuguese banks. I was on a roll, doing it all: hustling to raise as much money possible, looking at the real-estate ads and searching for the perfect property, sending emails to the realtors, sending emails to the brokerage firms. I even sent emails to the banks, even if I didn't know Portuguese rules, I didn't know the language, I didn't know anything.

Choosing the right brokerage firm to work with

When I started contacting all these brokers, I didn't know the difference between them. Because there is a difference, an important one!  For example, there are brokers located in UK who are collaborating with firms from Portugal in helping you obtain this credit. Because this market is 99% for the people from UK and US, so it is normal that these services to be tailored especially for them. This is where the money are!

For the ones in the UK or US, it's fairly simple, they are familiar with the documents requested, the documents are in the right language (English) and the right format. So these firms from "your country" (UK or US) they are charging you a fee for helping you with the process, contacting the bank in your behalf, doing all the work. Normal, right? Well... wrong! :))

I was soon to discover that if you work directly with the Portuguese brokerage firm, you don't have to pay anything for their services!

Yes, you heard right, the Portuguese firms are not charging you anything. They take their commission from the bank, only if you are successful in obtaining the credit loan.

How the ideal broker looks

So of course I ended up working with one of these Portuguese companies, but not just every broker, one particular amazing human, that I owe the fact that today we have this house in Portugal. What I want to emphasize here is that it's very important to find the right people to work with, because the process and the way the Portuguese are going about things in Portugal is very stressful and different than anything you are used to.

So it's very important to find a person who:

  • speaks English
  • is willing to work in your terms, not theirs; or maybe their terms are the same as yours! our way is fast and I want things to happen now; if I send you an email now, I want a response now, not in two weeks; I know you have thousands of clients, but I am a client also and I'm important.
  • recommends you people, has connections; he recommended me the lawyer, he found the bank, he found the apartment; he basically was a one-successful-man-show!

What about the lawyer?

You need a NIF in order to apply to a mortgage. So the broker recommended me also the lawyer who obtained the NIF for me without being a need for me to be in Portugal. Back then (before everything) we didn't have services like Bordr, who could obtain for you a NIF and a bank account remote, as if it is the simplest thing in the world. I fully recommend the Bordr service but in terms of obtaining a mortgage or buying a property you will be needing a lawyer. I know you've read that you can do everything on your own, only with the notary but you can't. We had a lawyer and still got into some troubles.

So back to our story, this lawyer helped us, without knowing us - just because the broker recommended us - without paying her in advance! In Portugal is much like this, people trust you if you are recommended by someone, especially a Portuguese.

At this point we had the broker and the lawyer working for us (for free until now) and we didn't know each other apart from a few exchanged emails! For us this was mind-blowing, since in Romania nobody will do something like that, even for people they do know.

So again, it's important to work with Portuguese people, good people, people you get from recommendations and people who are professionals. The majority of expats tend to work with the branches of the firm they recognise from their country, but I tell you: these are just corporations. You need to work with people who care about you and your problem, so work with Portuguese companies.

The bank said NO!

 It's June 2019, we found our dream broker and he applied for us for a mortgage at Santander bank. The broker chooses the bank where he applies, because he knows all the banks and he can make a good assessment based upon your documentation about your chances with each and every bank.

So he chose Santander.
Of course, he applied to many banks, but Santee was the one most likely to give us the credit. In terms of documentation there was  a lot of back and forth because we just didn't have the documents they need, in the sense that they don't exist in our country.

We gave him the usual requests, like my ID, the passport, a utility bill for my country proving my residencesident in that country, financial statements of the companies I own dating back 3 years, the Portuguese non-resident NIF, proof of ownership of my business. All these documents were translated into English and also "legalised". The cost of this was one to remember!

But the real problem appeared with the document named "proof from the central bank that you don't have other mortgages in your country". In Romania the "Central Bank" is not an institution that deals with the public, and we don't have such a centralised situation of the mortgages. We gave all the documents requested but this, he submitted the documents and then the waiting begun.

A process that had to take a week took months. Nobody knew what is happening. We waited from June until October. Also, we thought this was normal, because in our country is not that easy to get a mortgage, it takes time. So we didn't stress to much about it.

But by the middle of September I was determined to make something happen. I booked a flight to Portugal (in the hopes that being there will help) and I asked the broker to just apply to another bank because we wanted to finish all the process by the end of the year. At this point the final answer arrived and he said that unfortunately Santander rejected our file, because the risk was to great, we couldn't prove that we didn't have another mortgage on our name in another country.

In the same email the broker said that he he will immediately apply to other banks, but at that point the news was to much for me. I didn't want to hear about Portugal, about any apartment, I didn't want to hear about the broker.

I didn't reply back to him, I just shut down. Portugal was dead to me.

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