The purchase of a house is a significant milestone in the lives of many people, and mortgage credit plays a fundamental role in this process in Portugal. Understanding how it works, what the main characteristics are, and the important aspects to take into account can make all the difference when it comes to making this decision. In this article, we will unravel the mysteries of mortgage credit in Portugal, providing essential information for those considering purchasing their own home.
Main Features of Mortgage
Types of Interest Rates
- Fixed Rate: The interest rate remains unchanged for an agreed-upon period, providing predictability in monthly installments.
- Variable Rate: The interest rate varies according to a reference index (usually the EURIBOR), which means that installments may increase or decrease.
- Mixed Rate: Combines elements of fixed and variable rates, with an initial period at a fixed rate followed by a period at a variable rate.
Amortization Periods
The amortization period refers to the agreed-upon time for the total repayment of the loan, which can vary, typically between 10 and 40 years. The choice of term directly influences the amount of monthly installments.
LTV (Loan-to-Value)
The LTV is the relationship between the loan amount and the property’s appraisal value. Banks in Portugal typically finance up to 80-90% of the property value, which means that an initial down payment is required.
Important Aspects to Consider
Debt Capacity
Before granting credit, financial institutions assess the applicant’s debt capacity, taking into account income, expenses, and other existing loans. It’s important to ensure that the effort rate (percentage of income allocated to repay the loan) is within acceptable limits, typically not exceeding 30-35%.
Associated Insurances
Mortgage in Portugal requires the contracting of life insurance and home multi-risk insurance, which protect the property and ensure loan repayment in case of unforeseen events.
Associated Costs
In addition to the interest rate, there are various costs associated with home loans, such as opening commissions, property valuation, taxes and notary fees. It’s crucial to consider all these costs in financial planning.
Market Offers
It is advisable to compare the different mortgage offers available in the market, focusing not only on the interest rate but also on other costs and conditions offered.
Steps to Obtain a Mortgage Loan
- Simulation and Comparison: Use online tools to simulate and compare different mortgage loan offers. Would you like to simulate how much you can borrow to buy your new home?
- Documentation: Prepare all the necessary documentation, including income statements, identification documents, and information about the property.
- Property Appraisal: The bank will conduct an appraisal of the property to determine the maximum financing amount.
- Approval and Contracting: After reviewing the documentation and approving the credit, the housing loan contract is signed.
Conclusion
Mortgage is an essential tool for property acquisition in Portugal, but it’s crucial to understand its characteristics and important aspects to consider to make an informed decision. With proper preparation and consideration, it’s possible to find the best financing solution to acquire the house of your dreams.
Would you like to know how much you can borrow? You can request your simulation here.
