Owner finance in Portugal has been around for many years and although predominantly an American concept, more and more buyers and sellers of property in Portugal are turning to this method to help them either buy or sell their home. Typical owner financing works both for the seller and buyer. Simply put, it’s an alternative to obtaining finance from the usual sources, such as the banks and building societies.
Owner Finance for Buyers
Given the current state of the financial sector, and their lack of willingness to fund, many buyers are making deals with current owners who wish to sell their properties. Basically, the owner, like the bank or building society will carry the mortgage at an agreed rate of interest and for an agreed period of time. Therefore, instead of the buyer paying the bank, they simply pay the seller.
This helps in many ways, in that all of the following can be negotiated on an individual basis; size of deposit, the interest rate, deferred periods if any and period of the loan. If as a buyer, you are having difficulty in obtaining finance for your new purchase, simply ask the owner if they are in a position to hold the mortgage, and if so, once terms have been agreed, simply ask your lawyer to draw up the contract.
If you stop paying, in most instances, like with the bank, the ownership of your property in Portugal will probably revert back to the seller.
Owner Finance for Sellers
If you wish to sell your property but have found that the banks are reluctant to lend to your potential buyers, then if you are in a position to, you may be able to offer owner financing. Instead of having your potential buyers go to the normal funding providers, you may, at your discretion, offer your own financing to help close the sale.
Once you have agreed the terms of the contract and have closed the deal, instead of the bank receiving the buyer’s monthly payments, it will go directly to you. In a market, where current deposit rates of interest are low, you may find that by offering owner financing, you can actually get paid twice and receive more than you would, by leaving your funds on deposit at the bank. You’ll obtain the price you want on the sale of the property and receive interest on the outstanding amount.
The deposit, rate of interest and period of the loan are all negotiable, and if you wish you can always ask the buyer to obtain an insurance policy, that in the unfortunate circumstances of an untimely death, you get paid and their beneficiaries keep the home. Under all circumstances, owner financing of your home in Portugal should only be concluded with the aid of a competent and qualified lawyer and where possible the contract should be favourable to both the seller and buyer.
If you have any particular questions in relation to owner financing in Portugal, or would like to offer your property for sale in Portugal, under these terms, simply email or telephone Living Portugal Property at your earliest convenience.
If this suggestion of owner financing, helps to sell just one more home in Portugal, then Living Portugal Property will have done their job. Please feel free to share this information on OWNER FINANCING at your discretion. Good Hunting and Good Luck!