Most UK buyers in Portugal sign a binding contract in euros months before they pay for the property in pounds. That gap is where the money is lost. A forward contract fixes your exchange rate at the moment you commit, making the sterling cost of a Portuguese property a known number rather than a moving one. On a €400,000 purchase, a 3% adverse move costs roughly £10,200.
The currency problem specific to buying in Portugal
Portuguese conveyancing has a rhythm that creates currency risk almost by design.
You sign the CPCV (contrato de promessa de compra e venda) — the promissory contract — and pay a deposit of 10% to 30% of the price. It is binding on both sides: walk away and you forfeit the deposit; if the seller walks, they owe you double.
Then you wait. From accepted offer to final registration typically runs 4 to 12 weeks, ending with the escritura signed before a notary. Longer if there is a mortgage or a title complication.
So you have committed, in euros, to a price you will pay later, in pounds you have not yet converted. The property is fixed. Your cost is not.
A 2% move in GBP/EUR over eight weeks is unremarkable. On €400,000, 2% is €8,000 — roughly £6,800. That is a new kitchen, and it has nothing to do with the property market and everything to do with two central banks.
What drives the rate you will get
GBP/EUR is set, more than anything else, by the gap between Bank of England and European Central Bank interest rates. When that gap narrows, sterling tends to soften; when it widens in sterling’s favour, the pound tends to firm. Data prints and politics mostly matter through what they imply those two banks will do next.
You do not need to predict it. You need to know that you are exposed to it — because if you have signed a CPCV and left your rate unfixed, you are taking a position on European interest rates whether you meant to or not.
Your practical options
Three tools. They do different jobs, and the most common mistake is treating them as competing ways to “get a better rate”. They are not. Two of them are about certainty.
Spot contract
Convert at today’s rate; funds move within one to two working days. Use it when you need euros now — a deposit is due this week, or you are paying completion funds today. The trade-off: you get the rate that exists on the day. No protection, no upside capture. Read more on spot transfers.
Forward contract
A forward contract is an agreement to buy a set amount of currency at a fixed rate on a future date, usually up to 12 months ahead, secured with a deposit of around 5–10%.
Use it when you have signed, or are about to sign, a CPCV with completion weeks or months away. The trade-off: your rate is locked. If GBP/EUR then rises, you do not benefit. What you have bought is a known number, not a better one.
This is the standard instrument for property buyers, for a simple reason: on the day you sign a binding contract, you can also fix what it will cost you in sterling. Our explainer on how forward contracts work covers the detail.
Market order
Set a target rate; the trade executes automatically if the market reaches it. Use it when you have time, no fixed completion date, and a specific rate in mind. The trade-off: the market may never reach your target, and you may end up converting at spot anyway, later. See limit orders.
Worked example: a €400,000 Algarve purchase
All figures are illustrative, using round rates to show the mechanism. Use a live rate for your own numbers.
- Price: €400,000
- CPCV deposit (20%): €80,000, payable on signing
- Balance: €320,000, payable at escritura roughly ten weeks later
- Plus transaction costs of roughly 8%: €32,000
- Total euro requirement: €432,000
Scenario A — the buyer converts at spot, as each payment falls due. At an illustrative 1.17 on the day of the CPCV, the €80,000 deposit costs £68,376. Ten weeks later the rate has fallen to 1.14. The remaining €352,000 now costs £308,772. Total sterling cost: £377,148.
Scenario B — the buyer fixes the whole purchase with a forward contract at the CPCV, at 1.17. Both the deposit and the balance convert at 1.17. €432,000 costs £369,231. Total sterling cost: £369,231.
Difference: £7,917 — in favour of the buyer who fixed.
Now the other direction, honestly. Had the rate risen to 1.20 by completion instead of falling, Scenario A would have come in around £7,000 cheaper. The forward contract is not a way to win. It is a way to know. A buyer who needs certainty on the largest purchase of their life usually values that; a buyer with flexible timing and a strong stomach sometimes does not. Anyone who tells you a forward contract “saves you money” is selling you something — it removes a risk, and that is worth paying for or not depending on how much the risk would hurt.
Common mistakes UK buyers make in Portugal
Forgetting the tax bill is in euros too. Under Decreto-Lei n.º 97/2026 of 20 May 2026, which implemented Lei n.º 9-A/2026, non-residents buying urban residential property in Portugal face a flat 7.5% IMT rate on purchases completed from 25 May 2026. Add 0.8% stamp duty and notary, land registry and Casa Pronta fees of roughly €1,000–€1,500. Budget 6–10% of the purchase price in total. On €400,000 that is up to €40,000 of additional euro exposure that most buyers do not hedge, because they are thinking only about the property price.
Assuming the 7.5% IMT applies to you. It may not. The rate can fall away if you are already a Portuguese tax resident, or if you become tax resident within two years of the purchase — which describes a great many people buying a home they intend to move into. It may also not apply where the property is let residentially within the rent limits set out in the decree, provided it is let within six months and kept let for at least 36 months across the first five years. Budgeting 7.5% you may never owe is as costly a mistake as forgetting it entirely. Establish your position with a Portuguese tax specialist before you fix your budget.
Leaving the currency to completion week. The rate you get on a Tuesday in October is not a strategy. By then you have no options left — only whatever the market hands you.
Assuming the bank is fine because the fee is small. UK banks typically apply a 3–4% exchange rate margin. On €432,000 that is roughly £13,000, against £1,800 at a 0.5% broker margin. The £20 wire fee is not the point — as we explain in why banks give worse exchange rates.
Confusing NHR with IFICI. The old Non-Habitual Resident regime was replaced from 1 January 2025 by IFICI, which offers a flat 20% rate on eligible Portuguese-source income — but it is narrower, aimed at qualifying professionals in science, innovation, technology and education. It generally excludes retirees and those living on pensions or passive income. Buyers who moved on the strength of old NHR articles have been caught out. This is a matter for a Portuguese tax specialist, not a currency broker.
Wiring a deposit from an emailed IBAN. Conveyancing fraud on this corridor is real. Confirm the IBAN with your lawyer by telephone, on a number you sourced independently. Portuguese IBANs begin PT50.
How a currency specialist helps at each stage
| Stage | What you are exposed to | What can be done |
|---|---|---|
| Viewing / offer | Nothing yet — but you can budget properly | Establish a realistic sterling budget at the live rate |
| CPCV signed | 10–30% deposit due; full price now committed | Fix the deposit at spot, fix the balance with a forward |
| Between CPCV and escritura | Full remaining balance, 4–12 weeks of movement | Forward contract already in place; nothing to watch |
| Escritura | Balance plus 6–10% transaction costs | Draw down the forward; convert costs at the fixed rate |
| After completion | Ongoing euro costs — IMI, utilities, works | Regular payments at a set margin |
Cambridge Currencies arranges international payments through our FCA-authorised partners, Currencycloud (FRN 900199) and ScioPay (FRN 927951). Client funds are held in segregated accounts. Every transaction is completed by phone with a dedicated specialist — which matters most on the day a Portuguese notary is waiting and your lawyer needs cleared euros before the office closes.
Frequently asked questions
When should I fix my exchange rate for a Portuguese property purchase?
Most buyers fix at the point they sign the CPCV, because that is the moment the euro price becomes a binding obligation. Fixing earlier is possible; fixing later leaves the sterling cost undetermined.
What is a forward contract?
A forward contract is an agreement to buy a set amount of currency at a fixed rate on a future date, typically up to 12 months ahead, secured with a deposit of around 5–10%. It fixes your cost; it does not improve your rate.
How much deposit do I pay on a Portuguese property?
Usually 10–30% of the purchase price, paid on signing the CPCV. It is legally binding — forfeit it if you withdraw; the seller owes you double if they do.
What are the total costs of buying property in Portugal?
Budget 6–10% of the purchase price on top of the price. For purchases completed from 25 May 2026, non-residents pay a flat 7.5% IMT on urban residential property, plus 0.8% stamp duty and roughly €1,000–€1,500 in notary and registry fees. The 7.5% rate may not apply if you are already a Portuguese tax resident, if you become resident within two years of the purchase, or if you let the property residentially within the defined rent limits — so confirm your own position before budgeting.
Is NHR still available in Portugal?
No. NHR was replaced from 1 January 2025 by the IFICI regime, which offers a flat 20% rate on eligible Portuguese-source income but is limited to qualifying professionals in fields such as science, innovation and technology. It generally excludes retirees and passive-income holders. Speak to a Portuguese tax specialist.
How long does buying a property in Portugal take?
Typically 4 to 12 weeks from accepted offer to final registration, longer with a mortgage or title issues.
Can I get a mortgage in Portugal as a UK buyer?
Yes, Portuguese banks lend to non-residents, though typically at lower loan-to-value ratios. A mortgage changes your currency profile, because you are then converting a smaller lump sum but taking on ongoing euro repayments. See our international mortgage currency guide.
What exchange rate should I budget at?
Build your budget on a live GBP/EUR rate, then stress-test it 3% lower. A 3% adverse move over a typical purchase timeline is entirely normal, and a budget that only works at today’s rate is not a budget.
Speak to a specialist about your Portugal purchase
If you have found a property, signed a CPCV, or are simply working out what €400,000 really costs in sterling, it is worth a conversation before you commit.
Request a quote and speak by phone with a dedicated Cambridge Currencies specialist about fixing your rate for completion.
Related guides
- How to send money to Portugal from the UK — the mechanics of the transfer itself
- FX services for overseas property buyers
- Forward vs spot: which is right for you?
