HOW PROPERTY LICENCE TYPES AFFECT YOUR MORTGAGE APPLICATION IN PORTUGAL

PROPERTIES WITH A HABITATION LICENCE

A Habitation Licence certifies that a property meets all legal standards for residential use, approved by the local council.

Typical conditions:

• Financing up to: 80% (non-residents) or 90% (residents)
• Interest rates: Traditionally lower
• Type of loan: Standard residential mortgage
• Purpose: Primary residence, second home, or long-term rental

These properties are generally considered lower risk, offering the most favourable mortgage terms.

PROPERTIES WITH A SERVICE-USE LICENCE

A Service-Use Licence applies to properties designated for commercial or professional purposes — such as offices, studios, or serviced apartments — even when the layout resembles a residential space.

Typical conditions:

• Financing up to: 60–70%
• Interest rates: Increasingly attractive, often approaching those of residential mortgages
• Type of loan: Commercial or investment mortgage
• Purpose: Professional activity, investment, or mid-term rental under a service framework

In recent months, lenders have revised and reduced interest rates for service-use properties, reflecting the growing demand and value of this asset class, particularly in urban areas.

WHY THE LICENCE TYPE MATTERS

Before purchasing or applying for a mortgage, it is essential to confirm the property’s licence of use with the local council (Câmara Municipal).

This classification directly determines:

• The type of mortgage available
• The LTV ratio a bank can offer
• The final interest rate applicable

TAX DIFFERENCES: IMT AND STAMP DUTY

In addition to financing conditions, the type of property licence also impacts the taxes payable at purchase.

For Habitation Licence properties:

• IMT (Property Transfer Tax): Calculated on a progressive scale, with exemptions or reductions for primary residences up to certain values.
• Stamp Duty: 0.8% on the purchase price, plus 0.6% on the mortgage amount (if financed).

These benefits make residential purchases more tax-efficient for owner-occupiers.

For Service-Use Licence properties:

• IMT: Charged at a flat rate of 6.5%, with no exemptions, since the property is considered commercial or investment use.
• Stamp Duty: Also 0.8% on the purchase price and 0.6% on the loan amount.

This distinction can represent a significant difference in upfront costs, especially for high-value properties.