The most common mistakes first-time home buyers make during the purchase process

Mistake 1: starting to view properties without knowing your real budget

The first and most common mistake among first-time buyers is beginning to view properties before knowing exactly how much they can spend. It seems harmless. It is not.

Viewing properties without a defined budget has several negative consequences. The most immediate is the risk of falling in love with a property that is beyond your financial reach, creating an emotional reference point that will distort your assessment of everything that comes after. The second is the waste of time, your own, the property consultant's and the owners' of the properties you visited.

The real budget for buying a home includes much more than the amount the bank is willing to lend. It includes the deposit, which in Portugal is typically between 10% and 20% of the property value for a primary residence. It includes transaction costs, which typically add up to between 6% and 8% of the purchase price. It includes any potential renovation or moving costs. And it includes an emergency reserve for after the purchase.

Before viewing the first property, speak to your bank or a mortgage broker, understand the maximum financing you can access, calculate all associated costs and define a realistic price range. Only then start viewing.

Mistake 2: underestimating transaction costs

This is a mistake that surprises many first-time buyers, even those who thought they had done the maths correctly. The price of the property is only part of the total cost of the purchase.

In Portugal, buying a primary residence involves paying the Municipal Property Transfer Tax, the amount of which varies according to the purchase price and the buyer's circumstances. It also involves paying stamp duty, notary and land registry fees, and legal fees if you choose to have professional legal support.

For more detail on what you can expect to spend at this stage, Engel & Völkers provides clear information about property purchase documentation costs, which helps buyers plan their budget with precision. Leaving this analysis to the last moment is one of the most common ways of encountering unpleasant financial surprises when the process is already well advanced.

Mistake 3: not getting mortgage pre-approval before searching for a property

Many buyers spend weeks or months searching for a home, find the right property, make an offer and only then discover that the bank will not approve the mortgage on the terms they expected. This is an avoidable mistake that can cost them their dream property and a great deal of frustration.

Mortgage pre-approval is a process through which the bank assesses your financial situation and provides an indication of the maximum financing you can access and the likely terms of the loan. It is not a definitive commitment, but it is a reliable reference that tells you exactly what budget you are working with.

Having pre-approval before starting to view properties brings several advantages. It strengthens your negotiating position, because the seller and the property consultant can see that you are a serious buyer. It accelerates the purchase process when you find the right property. And it avoids the frustration of losing a property due to delays in bank approval.

Mistake 4: focusing too much on the property and too little on the location

When visiting a property for the first time, it is easy to get caught up in the details of the space: the kitchen has been updated, the rooms are spacious, the view is beautiful. What very often falls to second place is the location. And in property, there is a truth that has stood the test of time: the property can be renovated, the location cannot.

Before committing to a property, investigate the area. What is the traffic like during rush hour? Are there accessible public transport links? Are there quality schools nearby if you have or are planning to have children? What is the neighbourhood like at the weekend, in the evening, outside the ideal conditions in which you visited? Are there development or regeneration projects in the area that could change the character of the neighbourhood over the next few years?

Engel & Völkers advises all buyers to visit the area at different times of day and at different points in the week before making a final decision. A neighbourhood that seems quiet on a Monday morning can have a completely different dynamic on a Friday evening. Getting a full picture of the reality of the area is just as important as getting to know the property.

Mistake 5: overlooking the technical inspection of the property

Many first-time buyers look at a property through emotional rather than technical eyes. They see the potential, imagine the décor and are already mentally placing the furniture. What they do not do is verify the actual state of the infrastructure: the plumbing, the electrical installation, the roof, the structure, the insulation.

Problems in any of these elements can represent costs of tens of thousands of euros in works that the buyer had not anticipated. And in Portugal, there is no legal obligation for the seller to disclose all hidden defects in the property, although legal liability does exist in cases of deliberate concealment.

Engaging a construction technician or civil engineer to carry out an inspection of the property before signing the promissory contract is a small investment that can prevent a very large headache. The cost of an inspection is a minimal fraction of the cost of discovering a structural problem after you are already the owner.

Mistake 6: signing the promissory contract without reading or understanding it

The promissory purchase and sale agreement is a legally binding document that sets out the terms of the transaction, the timescales, the deposit amount and the consequences in the event of breach. Signing this document without reading it carefully, without understanding all its clauses and without legal support is one of the mistakes with the greatest potential for negative consequences.

The terms of the promissory purchase and sale agreement must be negotiated and verified carefully before signing. What are the resolutive conditions? What happens if the mortgage is not approved? What is the deadline for the final deed and what happens if it is not met? Are there any works promised by the seller that should be recorded in the contract?

Having a solicitor or lawyer review the promissory contract before signing is not an unnecessary cost. It is a guarantee that you are protecting your interests at one of the most critical moments in the entire purchase process.

Mistake 7: making an offer based on emotion rather than market data

When you find a property you really want, it is tempting to make an immediate offer without first analysing whether the asking price is fair relative to the market. This emotional impulse can lead to paying more than the property is worth, or to losing negotiating power by not having concrete data to support a counter-offer.

Before making an offer, seek to understand the value of comparable properties sold recently in the same area. How long has the property been on the market? Have there been any price reductions? Are there other interested parties? This information is the foundation of any well-grounded negotiation.

An experienced property consultant from the experienced property team at Engel & Völkers can help you carry out this market analysis and enter the negotiation with solid arguments, without damaging the relationship with the seller or leaving money on the table unnecessarily.

Mistake 8: not factoring in the long-term costs of ownership

The purchase price and transaction costs are the visible costs of acquiring a property. What many first-time buyers do not anticipate are the long-term costs that come with ownership: the service charge, property tax, insurance, maintenance and periodic upkeep works.

A cheaper property in a building with a high service charge can end up costing more than a slightly more expensive property in a building with lower running costs. An apartment with older equipment will require replacements in the coming years. A property with a low energy rating will have higher energy costs over time.

Carrying out this total cost of ownership analysis before making a final decision is what distinguishes a well-considered purchase from a rushed one. Always ask the seller for information about the service charge costs, the state of the building's common areas and the history of works that have been carried out.

Mistake 9: making rushed decisions out of fear of losing the property

The property market can create a sense of urgency that is not always genuine. Phrases such as "there are two other interested parties" or "the owner wants to close this week" are frequently used to pressure a buyer into deciding before they are truly ready.

Feeling urgency is natural. Giving in to it without thinking can be a mistake. A decision to buy a home should be made on the basis of complete information, a confirmed budget and a genuine conviction that this is the right property for you. Losing a property because you need one or two more days to think is always preferable to buying in haste a property you later regret.

If the urgency is real and there are other interested parties, the best approach is to have everything prepared in advance: your budget defined, your mortgage pre-approval in hand and a clear sense of your criteria. That way, when the right property appears, you can decide quickly without sacrificing careful consideration.

How Engel & Völkers can help first-time buyers

Buying a home for the first time does not have to be an obstacle course. With the right support, the process can be clear, well-structured and even enjoyable. The property consultants at Engel & Völkers have experience accompanying first-time buyers, knowing exactly where the most common difficulties lie and how to help overcome them.

From defining the real budget to negotiating the price, reviewing the promissory contract and accompanying you through to the final deed, having a professional at your side who knows the process inside out radically changes the experience of buying. You are not delegating the decision to anyone. You are ensuring that the decision you make is as informed as it can possibly be.

If you are ready to take the first steps, explore the available properties, speak to our team and find out how we can accompany you through this process with the attention and rigour that a decision of this importance deserves.

Frequently asked questions

How much of my own money do I need to buy a home in Portugal?

To buy a primary residence in Portugal, banks generally finance up to 90% of the property value for buyers under the age of 35 and up to 80% for other buyers, meaning you need to have between 10% and 20% of the property value in your own funds. To that must be added the transaction costs, which run at between 6% and 8% of the purchase price and must be paid from your own pocket, as banks do not finance them. In practical terms, a buyer purchasing a property worth 250,000 euros should budget for total own funds of between 40,000 and 70,000 euros, depending on their age and the specific financing conditions.

What is the difference between the bank's valuation and the market price of a property?

The bank's valuation is the amount the bank attributes to the property for the purposes of calculating the financing, carried out by an accredited valuer. The market price is the value at which the property is being transacted between buyer and seller. These two figures can differ, and when the bank's valuation comes in below the agreed purchase price, the bank finances based on the valuation figure, not the purchase price. This means the buyer must cover the difference from their own funds, which can create a need for own capital that is higher than originally anticipated.

What happens to the deposit if the mortgage is not approved?

If the promissory purchase and sale agreement includes a resolutive condition relating to mortgage approval, and the mortgage is not approved on the defined terms, the buyer generally has the right to recover the deposit without penalty. It is essential that this clause is explicitly included in the promissory contract before signing, with the conditions clearly defined: the maximum financing amount, the deadline for the bank's decision and the specific credit conditions. Without this clause, a mortgage refusal can result in the loss of the deposit, which can represent tens of thousands of euros.

Should I buy with a fixed, variable or mixed interest rate?

The choice of interest rate type depends on your financial profile, your risk tolerance and the market conditions at the time of purchase. The variable rate, indexed to Euribor, tends to be lower during periods of low rates but exposes the buyer to increases. The fixed rate guarantees a constant monthly repayment throughout the agreed term, regardless of market movements. The mixed rate combines an initial fixed period with a subsequent transition to a variable rate. There is no universal answer: the decision should be made on the basis of a careful analysis of your specific circumstances, ideally with the support of an independent mortgage broker.

Can I negotiate the price of a property that has only recently come on the market?

Yes, it is always possible to make an offer below the asking price, regardless of how recently the property came to market. The question is the negotiating margin available and the seller's position. A property that has just been listed, with a well-positioned price and several interested parties, has less room to negotiate. A property that has been on the market for many months, possibly already with price reductions, tends to be more open to negotiation. The key is to make an offer grounded in real market data rather than simply trying to obtain an arbitrary discount. An experienced property consultant can help you understand what a realistic margin looks like in each situation.

Do I need a solicitor to buy a home in Portugal?

It is not legally mandatory to have a solicitor to buy a home in Portugal, but it is strongly recommended, particularly for first-time buyers. A solicitor or lawyer specialising in property law can review the promissory contract, verify the legal status of the property, confirm that there are no undisclosed charges or encumbrances and accompany you at the deed signing. The cost of this legal support is relatively modest in relation to the value of the transaction and the protection it provides. For international buyers or in more complex situations, such as properties with pending inheritances or land registry irregularities, legal support is even more important.

What is the typical timeframe between signing the promissory contract and the final deed?

In Portugal, the period between signing the promissory purchase and sale agreement and the final deed typically ranges from 30 to 90 days, depending on the conditions agreed between the parties and the speed of the mortgage approval process. When the buyer is using bank financing, the property valuation and credit approval process is frequently the factor that most influences the length of this period. With a cash buyer and the property's documentation in order, the timeframe can be significantly shorter. It is important that the deadline set in the promissory contract is realistic and leaves sufficient margin for any delays in the banking process.

How do I choose the right property consultant to accompany me through the purchase?

A good property consultant to accompany the purchase of a primary residence should have deep knowledge of the market in the area where you are searching, the willingness to listen to your criteria and adapt the search to your profile, transparency in communicating the strengths and weaknesses of each property and experience in guiding first-time buyers through the complete process. A consultant who only shows properties without helping you understand the market, negotiate or prepare the documents is providing an incomplete service. The value of a good consultant goes well beyond access to properties: it lies in the knowledge, the guidance and the support at every stage of the journey.