The decision to purchase a property abroad is a huge one, with a lot to think about – especially if you plan to move abroad as well. Your finances must always be key to any decision as large as this, as it is very important to assess how much you can afford to spend – and how you are going to fund this purchase.
There are several options here – your own savings, selling or re-mortgaging your UK property, or a new mortgage for the new property. Before any decisions are made, it’s a good idea to decide on a budget – and it’s important to remember that this budget does not just include the purchase price, but will also need to cover any other costs that arise (such as legal fees, taxes, maintenance etc.); there are likely to be more than you realise and some will pop up unexpectedly. If you press ahead without taking this into account, you may well end up running out of money.
You also need to consider currency fluctuations; this is often one of the last things that overseas buyers think about, which can be problematic as you can save or lose a lot of money through the process of transferring your funds from sterling into euros (unless of course, you already have enough euros in Portugal to cover the property purchase!)
The currency market is volatile and making your exchange when the rates are not in your favour could make a dramatic impact on your purchase – especially if there is a large rate change between the day you agree to buy and the day that you complete.
Your finances will continue to affect you throughout your property purchase process and move to Portugal – and even after. There is a lot to think about, from tax implications to drawing your pension and maintaining your life in Portugal. If you have mortgage repayments, you will need to know exactly how much these are, and when you will be paying them, as well as any other funds you need to maintain your life. Research into the different costs of living in Portugal and the UK is essential – although you will generally find Portugal to be much cheaper than the UK.