When applying for a mortgage in Portugal, the concept of Loan-to-Value (LTV) — known locally as rácio LTV — determines how much of the property's value a bank is willing to finance. Understanding this ratio is essential for budgeting your property purchase.
Current LTV Limits in Portugal
LTV ceilings are set by Banco de Portugal's macroprudential recommendation. The regulatory ceilings are 90% for a permanent own home and 80% for other purposes, such as a second home or an investment property. Non-residents are usually financed at 60–80%, depending on the bank and their profile.
How LTV is Calculated
The LTV ratio is based on the lower of two values: the purchase price or the bank's own property valuation. If a bank values a property at €300,000 but you agreed to pay €320,000, the bank will base its loan on €300,000. At 80% LTV, the maximum loan would be €240,000 — regardless of the agreed purchase price.
What This Means for Your Down Payment
If you're a non-resident buying a €400,000 property, plan for a deposit of 20–40% depending on the bank and your profile — €80,000 to €160,000. On top of that, purchase costs come close to 10% of the price for a non-resident: 7.5% IMT, 0.8% stamp duty on the purchase, 0.6% stamp duty on the loan, plus notary, registration and legal fees. That is roughly €40,000 more in cash.
Can You Negotiate a Higher LTV?
In some cases, yes. Banks may offer slightly different terms for premium clients, or for properties with strong valuation fundamentals. A broker can advocate on your behalf and identify which lenders offer the most flexibility.
Understanding LTV early helps you plan your finances realistically — and avoid the unpleasant surprise of being short on closing day.