Portuguese mortgage for non-residents on the Algarve: German income for a detached house in Silves
Silves is one of the most history-steeped towns in Portugal. The imposing castle, the historic old town and the location in the Algarve's hinterland give the town a special character. At the same time, the coastal resorts and beaches are within a short drive. For many German-speaking buyers, Silves is an attractive alternative to the classic coastal towns when a permanent centre of life with more tranquillity and authentic Portuguese daily life is sought.
How is the modernisation of a house in Silves paid for?
It is paid from equity, not by the bank loan. As a rule the Portuguese bank does not co-finance modernisation. In Silves the loan was €454,100, about 64 percent of the €714,000 purchase price, and the €53,000 for kitchen, bathrooms, windows and home office came from equity. The equity came from a property sale and securities, and part stayed invested.
Price 714,000 €, works 53,000 €, loan 454,100 €
- Purchase price: 714,000 €
- Renovation: 53,000 €
- Financing required: 454,100 €
- Equity: 355,900 €
Anonymised case figure · not a binding statement for other projects · §34i GewO
Who wanted quiet living with historic flair in the Algarve?
A couple from Hesse, she a tax adviser, he a mechanical engineer, planning a full move to Portugal within two years; they chose a detached house in a quiet residential location on the edge of Silves.
Two years until the move, a house on the edge of Silves: A couple from Hesse – she a tax adviser, he a mechanical engineer – planned a full move to Portugal within the coming two years. Both wanted to continue their professional work partly remotely at first and then spend their retirement permanently on the Algarve.
After a longer search, they chose a detached single-family house in a quiet residential location on the edge of town in Silves. The property was convincing for its generous layout, the low-maintenance garden and the good accessibility of the town centre.
810,000 € total investment, 355,900 € in equity: Purchase price: 714,000 €; Additional costs: 43,000 €; Renovation: 53,000 €; Total investment: 810,000 €; Equity: 355,900 €; Financing required: 454,100 €.
Where did the equity come from?
The buyers had equity from the sale of their previous property as well as from long-term securities investments. Nevertheless, part of the assets was to be deliberately kept invested in order to preserve financial flexibility for retirement and future expenses.
Before moving in, the house was to be adapted to the requirements of a year-round residence.
What were the 53,000 € spent on?
A new fitted kitchen, two modernised bathrooms, energy-efficient air conditioning, several insulated windows and a large home office.
The property was in good structural condition. The planned investments were intended to improve living comfort and energy efficiency.
The plans included a new fitted kitchen, the modernisation of two bathrooms, an energy-efficient air-conditioning system with individual room controls, the replacement of several windows with thermally insulated models, and the creation of a spacious home office with bespoke fitted furniture and modern network cabling.
As all the measures had already been calculated in detail before the purchase contract was finalised, they could be included in full in the total investment.
In addition to the purchase price, all acquisition costs and all planned modernisation measures were included in the overall plan from the outset — funded from equity, not from the bank loan. This meant that no additional financing was required at a later stage.
Modernisation is part of the overall plan, not the loan: As a rule the Portuguese bank does not co-finance modernisation. Besides equity, it can also be funded by raising capital against German property.
Why was around 64 % of the price financed?
So that enough equity stayed available as a long-term reserve with a balanced financing structure; costs and works came from equity, not the bank loan.
Alongside the purchase price, all acquisition costs and all planned renovation measures were included in the overall plan from the outset — covered from equity, not by the bank loan. A later follow-up financing was therefore not required.
House complete, room left for travel and family: Once the work was complete, a comfortable home was created that offers the buyers ideal conditions both during the last working years and in later retirement.
The financing remained calculable over the long term while at the same time leaving sufficient financial room for travel, family and personal projects.
Why choose Silves inland rather than the coast?
Silves offers authentic Portuguese life, more quiet and often more space without giving up the Algarve’s attractions, and counting all costs gives a clear calculation.
If you take full account of the purchase price, acquisition costs and modernisation costs when buying a property, you will lay a solid foundation for your future move.
Silves: Overall plan secures a comfortable home in the Algarve: Silves combines Portuguese history with a high quality of life and a relaxed way of life. An overall plan that takes into account the purchase price, acquisition costs and all planned modernisation works at the time of the property purchase — the bank loan for the purchase price; purchase costs and modernisation from equity — lays the foundation for a secure and comfortable home in the Algarve in the long term.
Frequently asked questions
Why is existing equity not used in full?
Many buyers want to preserve financial reserves and keep their capital investments broadly diversified.
Which properties are especially in demand in Silves?
Detached single-family houses, villas, townhouses and modern apartments in quiet residential locations are among the preferred properties for permanent owner-occupation.
Which renovation work was planned for the detached house in Silves?
Planned were a new fitted kitchen, the modernisation of two bathrooms, energy-efficient air conditioning with individual room control, the replacement of several windows with thermally insulating models and the fit-out of a generous home office. All measures were calculated in detail before the purchase contract was concluded.
A similar situation in Portugal? Let's talk.
Every financing in Portugal is an individual case. In a free initial consultation I will tell you honestly what is feasible and which bank fits.
German-speaking, working under the licence held by Olga Nikushkina under §34i GewO; in Portugal through an intermediary licensed there. At least 2 of 15–20 banks are approached for each case. On completion the fee is 1 % of the loan amount. · Anonymised individual case, not a binding statement for other projects · Brokerage under the §34i GewO licence held by Olga Nikushkina (D-W-132-ZUCB-95); Siegfried Perini registered as directly involved person (§11a GewO) · no tax or legal advice · no financing commitment; conditions depend on creditworthiness, loan-to-value and bank
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Content by Siegfried Perini — local brand representative since 2019, active in real estate since 1992, entered in the German intermediary register (§ 11a GewO) as a person directly involved in brokerage and advice. Point of contact for German-speaking buyers in Spain and Portugal. Brokerage by Olga Nikushkina, mortgage credit intermediary under § 34i German Trade Regulation (GewO); in Portugal through a locally licensed intermediary.