Once you have considered how much money you can afford to spend, where you are going to take this money from, and what kind of impact exchange rates could have on your purchase, you will need to assess exactly what this money needs to cover. In addition to the actual purchase price of the property you find, you will need to consider the other costs involved in a property purchase – such as fees and taxes. Thinking about this in advance will allow you to understand exactly how much you can afford to spend on the property itself.
We would generally recommend allowing around 10-15% of your purchase cost for additional fees, such as notaire fees, transfer tax and estate agent fees. We recommend taking the following into consideration:
- The total amount of money you have available to purchase a property
- If you buy with a mortgage, how much of a deposit will you need? How will the repayments be made?
- The possibility of re-mortgaging your UK home to release equity
- The costs that come with buying property (i.e. taxes and fees)
- Your maximum purchase price, taking all of the above into account
- The cost of maintain the property and spending time there
Once you are in your property, you will also need to consider the cost of maintaining it and your life there; some of the costs that you are likely to have to cover on a monthly or yearly basis include:
- Local property and council taxes
- Community fees
- Internet connection
- Car/transport costs
Council tax in Portugal is known as IMI, and is based on the official rateable valuation of a property; this is payable by the person who owns the property on 31st December. The tax rate is fixed annually by the respective Municipality, and will usually be between 0.3-0.5% per cent for urban properties and around 0.8% for rural properties. IMI is usually paid in three instalments per year, in April, July and November.