Pros Of Investing In a Property While You Are Young

7 keys points to buy a property when you’re young

1. Availability and motivation

Difficulties in buying a home always exist, but the more time passes, the greater the difficulty in finding the time and desire to do all the work that the search for a property entails.

During youth and early adulthood, you tend to be freer and the desire and enthusiasm to buy a home can be a strong ally for you to navigate the process.

This more intense and passionate demand can be the key to getting a dream property at an affordable price.

2. Mortgage for young people

Another of the great advantages of investing in real estate when you are young is the privileged access to offers that are aimed exclusively at the younger age groups.

Many banks or credit institutions have exclusive options for their younger clients, offering specific advantages, which may be linked to bigger mortgages (which may reach 80% of the total property) and reduced commissions, specifically for those in this age group.

Thus, the mortgage that a young person can obtain for the purchase of their home can be much more advantageous and present better conditions than the one obtained later in life.

Starting this year, due to a new measure implemented by the current government, there is special support available for young people up to 35 years old. This is in addition to those which already exist from banking institutions, making this an ideal time for young people to invest in buying a house.

3. New government measure to support the purchase of a home for young people up to 35 years old.

Young people up to 35 years old now have special support from the state with the “You Have a Future in Portugal” measure. With this measure, young people have a public guarantee for 100% financing on their first real estate loan. Houses with a price not exceeding 450,000 euros are covered.

With this measure, young people can buy a house without making a down payment, with a guarantee from the State - this has a limit of 15% of the value of the property. The State assumes responsibility for part of the risk, but it is mandatory that the young person meets the necessary conditions to pay the entire value of the respective property for which they acquire a loan.

In practical terms, this guarantee corresponds to 10% of the value of the real estate loan. Therefore, the Government only allows bank financing for the part that is not covered, which corresponds to the down payment for the purchase of the property, this being the value normally required by banks from the young persons.

4. Exemption from IMT and Stamp Tax

This measure does not replace those that already exist when purchasing a first property. The exemption from IMT and Stamp Tax is still in effect. All of these measures cover a maximum age of 35 years and an income that does not exceed 81,199 euros gross per year.

For the acquisition of an urban building (or an independent fraction of an urban building) that is intended exclusively for personal and permanent housing, there is an exemption from IMT (Municipal Tax on the Transfer of Property). This applies to any new buyers who are up to 35 years of age, and up to a maximum property price of €316,272.

For real estate above €316,272 and up to €633,453, the exemption of the previous bracket still applies. Any properties above this value are not subject to any exemption of IMT, and this tax must be paid.

Buying a house with the support announced by the Government for young people up to 35 years old opens a window of opportunity for those unable to accumulate the down payment and taxes.

5. Reductions and incentives

The state measures explained above also serve as a major help to the young person if they have a partial lack of financial capital. In addition to the existing help, this is another valuable support. 

If the young person doesn’t have enough funds for the initial down payment, they will always have a chance to reduce the debt by repaying the credit when they have the financial means to make investments of greater value.

Each banking institution has specific rules regarding the amortization of installments, which must be well studied and analyzed. You can rely on Engel & Volkers support in this process to ensure you get the best deal when buying your first home.

6. Monthly payments versus income

The cost of living, as mentioned in various news headlines, is reaching new highs that have become infeasible for many young people at the beginning of their careers.

Although buying a home implies a higher initial investment, the fact is that the monthly mortgage payments are lower than the rental, and at the end of the day, the property belongs to the person making these payments.

So many young people choose to buy, because they feel that they are investing in their future, and also because they know that the monthly repayment of the mortgage is more profitable than paying rent to a landlord.

7. Achieving personal goals

More motivated, physically fit, and more willing young people are also those who can most easily adjust themselves towards problem solving, especially when they feel they are moving towards their personal goals.

Since the right home is one of these goals, the young person will have the opportunity to find a place of comfort and happiness that will allow them to better manage their emotions and finances, which is an essential factor for success.

Of course, in order for everything to go smoothly, it is always good practice for young people to have the support of those who can help make their dreams come true. A good example of this is Engel & Völkers, a renowned agency with extensive knowledge of the Portuguese property market and the ability to ensure that all the young person's goals are fulfilled.

It is our mission to help you take advantage of the support available to young people wanting to invest in their first property in Portugal.