After covering residential mortgages, it’s time to address a topic that attracts investors and entrepreneurs: commercial mortgages. This type of financing follows a different logic and has distinct requirements.
To explain how it works, we’re joined again by Elena Bykovets, CEO and Founder of RelyOn Relocation®️, who has guided numerous clients through commercial property transactions across Portugal.
Question: Why are commercial mortgage conditions stricter than residential terms?
Elena: For banks, commercial property carries higher risk. Income depends on tenants, cash flow, and business performance, so the evaluation is more complex. Instead of looking only at a family’s income, banks assess the project’s potential, the stability of rental income, and long-term viability.
Question: Which conditions differ the most?
Elena:
– The Loan-to-Value wich is the ratio of the first mortgage line as a percentage of the total appraised value of real property (LTV) is lower: usually 50–65%, compared to 60–90% for residential loans.
– Rates are higher: around 4.5–6%.
– Terms are shorter: typically 15–20 years, not up to 40.
– Approval criteria are business-oriented: rental yield, business plan, projected cash flow.
Question: Can you give a real example?
Elena: Here’s a typical example:
Property price: €300,000
Loan: €195,000 (65%)
Rate: 4.8%
Term: 20 years
Monthly payment: around €1,250
Down payment: €105,000
One-time costs: approx. €28,500 (IMT, stamp duty, bank fees)
Question: What documents are required for a commercial mortgage?
Elena: In addition to standard identification, NIF, and proof of income, banks will request:
– a detailed business plan (if used for your own business),
– a rental contract or income projections (for investment property),
– company financials if the buyer is a business entity.
Question: How does RelyOn Relocation®️ support clients through the process?
Elena: Commercial deals require strong preparation. We analyse the property and its rental potential, prepare the financial file that banks expect, gather documents, and negotiate with banking teams. A well-structured application significantly increases the chance of approval.
Commercial mortgages in Portugal come with a higher entry barrier but often with greater income potential — provided the property is chosen carefully and the financial groundwork is solid.
Book a consultation — we’ll calculate your project’s expected yield, check your documents, and prepare a strong application for commercial mortgage approval.
