A mortgage loan is a loan used to purchase a home. It is a financial instrument that is typically given to people by financial institutions and consists of a loan of a specified amount geared toward the acquisition of real estate. In exchange, the consumer agrees to repay the loan, interest, and other associated fees in agreed-upon monthly instalments over a certain period of time.
In addition to the personal guarantee, the financial institution takes a lien on the property to ensure that the loan is repaid. This is why it is called a mortgage loan.
If you intend to buy a house with the help of a bank loan, you must bear in mind that you will need to collect a number of documents and present them to one or more lenders at various stages of the procedure. Portuguese banks are authorised by law to ask for all the necessary documents to prove that the borrower is able to pay the mortgage, such as:
EMPLOYED
- Personal Identification Document;
- Proof of Address;
- Payslips for the previous three months/or proof of any recurring revenue earned;
- Employment status statement from the employer;
- Bank statements for the previous three months (primary account);
- Expenses receipts (e.g. mortgages, personal loans, credit cards, and other loans);
- Last income statement submitted to the Tax Office and respective settlement note (IRS);
- Central Credit Register (e.g. from Banco de Portugal).
SELF-EMPLOYED
- Balance sheet and salary statements for the last two years and/or tax returns paid by the company in the last two years with proof of payment;
- Accounting Certificate;
- Declaration of assets and expenses (where applicable).
PROPERTY DOCUMENTS
- Caderneta Predial;
- Certidão do Registo Predial (also known as Certidão Permanente and Certidão de Teor);
- Utilization Permit or Certificate of Exemption from Utilization Permit;
- Energy Certificate;
- Floor Plans;
- Housing Technical Data Sheet (if applicable);
- Declaration of no debt to the condominium (if applicable);
- Right of First Refusal.
WHAT TO LOOK FOR WHEN APPLYING FOR A LOAN?
To get started, you should have some money set aside for the initial charges associated with the credit procedure and property inspection, as well as the notarial costs associated with the deed and registrations. Furthermore, most banks finance up to 90% Portuguese, 80% Foreign, of the property´s worth, therefore a down payment is required to complete the total purchase price.
We also recommend adjusting the loan instalment to your family budget, taking into account possible fluctuations, and should not exceed 35% of disposable income (effort rate).
ADVANTAGES AND DISADVANTAGES OF A LOAN
Access to this type of credit is the only way for most families to buy a home. However, it comes at a higher cost, as the interest is paid over several decades, often ending after the borrower´s working life.
Most loans of this type are variable, linked to the Euribor, so that the value of the instalment varies with each periodic review.
HOW TO CHOOSE THE BEST BANK?
With the help of our partners, made up of a network of certified and trained credit intermediaries who are fully prepared to find the most appropriate solution for each case and for each specific need. They accompany the client throughout the credit process, informing them of the different options available on the market, with information on initial costs, bonuses, nominal and effective interest rates, showing the difference in relation to the best option, from bank analysis/comparison to credit approval, leading them to choose the bank that best suits their needs.
In the first phase, a meeting is scheduled with the credit intermediary to provide and collect basic information (personal data and explanation of the process), which will later be supported by the documents described above. Once this information has been gathered, a detailed proposal will be prepared and sent according to the client´s situation.
Even if a property hasn´t been selected yet, the process can be started by obtaining a pre-approval for a loan to know what the limits are and the amounts for which the market research should be conducted.
Currently, the credit pre-approval process is relatively quick.
HOW TO TRANSFER A MORTGAGE?
Throughout the life of the loan, it is possible to transfer the loan to another institution that can offer more favourable rates. However, the costs of early amortisation and the notary costs of a new deed will have to be borne by the client.
If you are thinking of buying a house with a mortgage, QUALI, with the help of a credit intermediary with a vast experience in real estate financing, can help you by offering you a mortgage solution adapted to your needs and your specific case.