Investors and developers are now looking at new ways in which to side-step the banks allowing them to secure a deal, says Infinito Real, an Algarve based agent who found that bank lending is still the main stumbling block in the Portuguese property market.
Stephen Anderson, Managing Director of Infinito Real, told the Algarve Resident: “The demand is there but financing is still proving difficult. However, recently we have seen a few savvy developers offering an alternative method of funding to avoid the “stumbling block” of acquiring finance from the bank, thus helping to get the property market moving.
“The idea involves buyers putting down an approximate 30% deposit and then spreading the remainder of the payment to the developer over a period of years agreed with the developer and depending on the client.”
The idea is that once the client pays the deposit, they will sign the deeds, meaning they own the property and can rent it or use it however they wish.
The offer is interest free with regular payments due over the term of the contract, but this deal is currently only available with a few select developers throughout the Algarve.”
According to Stephen Anderson, the only other viable option available at present for those who want to make a purchase in Portugal, but require the funds to do so, is to refinance a UK property.
“A common option now is for purchasers to use funds from the UK and reserve the option to refinance in Portugal at a later date, when the banks are lending more freely.”
Banks are still lending to those who have very little debt elsewhere and have considerable income levels, so for those clients options are still available up to 80% of the purchase price.
However, for self-employed or existing property owners for example, it can be difficult to finance anything over 50%, says Infinito Real.
Click here to follow the Algarve Resident on facebook