Housing Loan (Portugal)

Moving to another country is a big change. One of your first tasks is to find a home. If you choose to take out a home loan, remember our explanation of how and under what conditions you can get a loan in Portugal. Click Here to get more details about housing loan.

Portuguese real estate has gone through a very strong phase, supported by Portugal’s economic growth and interest in development in the country. As a rule, the financial sector has had an interest in providing housing loans. The amount banks are ready to lend increased and spreads decreased.

The first thing you should do is see what the bank has in hand and ask for criticism. They calculate your leverage ratio, which shows how much your payroll and other fixed costs are relative to your household budget. The bank will make recommendations based on your financial situation.

Spread vs. APR:

One of the most important aspects of the loan is the spread, which is the product of the mortgage interest determined by the bank in the case of the site where the school newspaper will get a profit margin.

However, this interest varies from bank to bank, depending on the financial product you are registered with. The more you connect with the bank, the more products you buy, the lower the spread will be. However, it is important to calculate the total cost with the loan.

But more important than the spread is the value of the Annual Percentage Rate (APR), which is the total amount the customer has to repay for the loan, and the total payments from customers to customers (TAB). This interest rate will determine the actual cost you will have to bear for the loan you intend to take.

Importance of Valuation:

One of the most important stages in loan application is real estate valuation. This number will form the basis for determining the maximum amount you can apply for a housing loan.

The Bank of Portugal advises banks and financial institutions not to lend more than 90% of the property value when purchasing a permanent residence. For other purposes, the maximum is 80%. If the loan material is the school’s own real estate or bonds, the bank can lend up to 100%.

The bank also has a limit on the maturity of the loan. The maximum term is 40 years, but cannot exceed the remaining years before the debtor reaches the age of 80.

What are the costs of getting a loan in Portugal?

There are many costs to getting a loan in Portugal. You must first pay all required documents, including taxes and registration fees, in order to receive the loan. You will also have to pay the costs of work study, property analysis, contract preparation and formalization.

In addition to the fees you owe the bank, you will need to pay the auction fee (0.8%) and the loan amount, as well as the registration and municipal tax (IMT).

The ceremony may be celebrated by the Registry, Notary or Casa Pronta.

Variable rate or fixed rate?

Another decision you have to make is the type of price you want. You can choose float, flat or mixed.

Most mortgages in Portugal still depend on the floating Euribor rate. But more and more people prefer direct loan.

If you choose a floating rate, it will be fixed for 12 months (most banks only use 12-month rates), which means the value of your loan will only change once a year.

On the other hand, a flat rate may apply for your entire loan or for just a few years. It all depends on your expectations. If you don’t need a variable rate, you prefer a fixed rate.

Documents required to sign the deed:

Deed is the date the property was officially purchased. Once you’ve selected a property, secured the loan, and handled all the bureaucratic procedures, all you have to do is sign the paperwork to make it yours. So you don’t want to forget anything! The documents you need are:

  • ID
  • Signed Sales Contract.
  • Energy and Air Quality Certificate.
  • Land Registry.
  • Declaration of Ownership or Registration Request (IMI Form 1) issued by tax authorities.
  • Residential License.
  • Infrastructure Certificate.
  • Place Name Certificate.
  • Stamp Duty Payment Certificate.
  • Municipal Property Transfer Tax (IMT) Payment Documents; Proof of payment.

Related insurance:

When you get a home loan in Portugal, you need to purchase some insurance policies that must be provided by the company that provided the loan. First you need to sign up for various accident and life insurance policies. The latter covers material damage, while the latter guarantees the repayment of the loan in case of death or disability.

In Portugal, you also need to have electricity insurance for buildings. In addition, there are optional options such as home insurance.

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