It was in the closing decades of the 20th century, in the year 1986 that Portugal finally became a part of the European Union. Prior to this Portugal has no doubt been progressing in all respects but since its inclusion in 1986, the country has shown a marked improvement economically and has been able to strengthen its position with the progress of time. Its economic prosperity has had a positive effect on its social life as well and recent studies have revealed that Portugal provides one of the best living conditions and quality of life in the world. Real estate is an emerging market in Portugal and mortgaging is one of the prevalent ways of property transaction.

There are three major ways of acquiring a mortgage in Portugal. These include capital and interest repayment mortgages at variable and fixed rates and also through interest only mortgages. Fixed rate capital and interest repayment mortgages ensure from the very beginning the amount that will have to be paid by the property owner as interest. If compared with the variable rate mortgages of the same kind, it is found that the rate of repayment s definitely higher for fixed rate repayments. Moreover in cases when the property owner may decide upon shifting to variable rates or he decides to redeem the mortgage before time, he is often exposed to facing dire consequences. Therefore it is advisable to be aware of the terms and conditions of the mortgage provider thoroughly before investing. For variable rate mortgages the amount to be repaid does not differ with the fluctuating interest rates. It is only the term period of the loan that is affected in such cases. Here also, early redemption involves paying a penalty but this mode is considered to be more elastic than the other. Interest only loans are meant for the residents of the country and are usually not offered to the non residents in Portugal.