By Linda Kenny [email protected]
Linda Kenny is International Mortgage Adviser for Blacktower Financial Management Group.
The summer months are traditionally a quiet time for the property market. It is holiday time and many of the properties which are on the market will be earning income for their owners as holiday rental properties and are, consequently, unavailable for viewing.
So this, added to the already depressed market, continues to make life difficult for many businesses in the Algarve. Of course if you are one of that rare breed, a property purchaser in Portugal, there continues to be some first rate properties at great prices.
The British, who form by far the highest percentage of non-resident buyers, have largely stayed away , no doubt still reeling from the UK government’s austerity measures to tackle the debt mountain and curb the budget deficit , not yet knowing how the tax rises and spending cuts will affect their own businesses and jobs.
The Portuguese second home market is less influenced by the precarious state of the Portuguese economy, which has had its problems for many years, but it is only recently that anyone outside Portugal appears to have taken much notice.
Agents report continued interest in the well located, established resorts, particularly in the Central Algarve, but it is difficult to forecast any reliable trend with such a thin volume of transactions. Although there are many, varied, and often conflicting, financial reports coming out of the UK, the overall general trend appears to be positive.
We can be sure that as the economy picks up and confidence returns in the UK that the Portuguese property market will be one of the main beneficiaries.
As in the UK, some banks are doing their best to stifle what little property market recovery there might be – they know who they are!
But the good news is that others have funds ready to lend and have even brought out new mortgage products to suit non-residents. Interest rates continue to be very attractive with margins of between one per cent and 2.5 per cent above Euribor. In addition to loans for the purchase of property, loans are also available for construction, renovation, remortgage and equity release.
There is good news if you are resident in Portugal, aged over 55 and still have property in the UK. It is now possible to release equity in that property (previously this option was only available for UK residents).
The UK property can be either a house or an apartment. The equity released can be in one lump sum or regular payments and can be used for any purpose you wish.
The two main types of Equity Release are Home Reversion Plans and Lifetime Mortgage Plans.
A Home Reversion Plan allows you to sell all or part of your property for a cash lump sum while allowing you (and anyone else named in the agreement) to continue to live in it rent free until you die or wish to move.
The amount of cash you are able to receive will vary with age – the older you are the higher the percentage of the property’s vacant possession value is available as a lump sum.
A Lifetime Mortgage Plan allows you to take out a single cash lump sum or a series of smaller lump sums. Under this type of plan you still own your own home and you can live in it until the last applicant dies or moves into long term care.
There are no monthly payments as interest rolls up and is added to the loan. You can move to another property – although this might require a partial repayment of the loan or other charges. The loan can be repaid at anytime although early repayment charges might have to be paid.
Please remember that equity release is not the right choice for everybody and it is important that you understand how it works, the risk involved and not just the benefits and what the alternatives are.
For all important financial decisions, you should always seek independent unbiased professional advice. With any type of property finance there is a wide range of providers and products and you need to find the plan which is best for you.
This facility is not suitable for all expatriates, and we recommend that advice is sought before one makes any commitment. As an Independent Financial Adviser, Blacktower seeks to ensure that our clients receive the advice suitable for their specific circumstances.
For further information, please contact Linda Kenny on telephone (+351)289 355 685, email [email protected] or visit www.blacktowerfm.com.
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