Housing credit: How to know if I have financial capacity?

Housing credit: How to know if I have financial capacity?

To proceed with a loan request for your new home, you must go through preliminary phases: it is necessary to know beforehand if you have the ability to pay a loan installment every month. Find out in this article how this pre-process works.

11 Aug 20234 min

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Let's move forward with the analysis of the feasibility of your home loan? Poupança no Minuto, with its free credit intermediation, handles the process with banks in an instant. To understand how this phase is carried out in practice, read below.

First step: Sending documentation

In order to ensure that you have the financial ability to proceed with a mortgage loan, it is necessary to provide documentation to a credit intermediary, or directly to the banks. From there, the entities will proceed with the evaluation of your income and determine if you have the ability to pay a mortgage installment, as well as the maximum amount you can afford. Please visit financial capacity for more information.

So, the first step is indeed this: gather some documents that describe, especially, the incomes of the holders who will apply for credit.

Let's review each one:

  • Personal identification document;
  • Last IRS settlement note;
  • Last IRS statement;
  • Income statement;
  • 3 last payment receipts;
  • If necessary, green receipts from the last 6 months and start of activity declaration.
  • Document proving the contractual relationship, provided by the employer entity;
  • 3 last bank statements;
  • Map of responsibilities of the Bank of Portugal;
  • Proof of IBAN;
  • And proof of address.

Second step: Ensure financial capacity

From there, the bank proceeds with a feasibility study, analyzing your effort rate, to verify if you have financial capacity. Being able to support the payment of a mortgage, the entity also declares the maximum amount it is able to pay for a property, considering its financial context.

But what is the effort rate? This concept represents the relationship between the total monthly income of a household and the expenses with credit installments. For example, if a couple is proposing to be holders of the housing credit, the incomes of both are taken into account.

The ideal effort rate, according to the Bank of Portugal, should be between 30% and 34%. If this couple receives a total of 3,800 euros per month, the maximum amount they can pay in credit installments is 1,500 euros (1,500/3,800) x 100 = 34%). So, if they pay 500 euros for a car loan, they can only have a housing credit installment of 1,000 euros.

This is the calculation that must be performed to determine the effort rate, which the bank will analyze. Some banks approve effort rates up to 40% and others up to 30%. Therefore, it is essential to request proposals from more than one bank.

Third step: Find the property for pre-approval of credit.

After determining the maximum installment value for the housing credit, it's time to choose the property (based on the values indicated by the bank in the feasibility study).

After the phase of searching for properties, with or without the help of a real estate agency, you should once again contact the banks with the specific amount in question. At that time, the bank entities will recalculate the simulations and issue the pre-approval of credit.

It is important to note that you can always request simulations from various banking institutions and obtain more than one pre-approval. This phase does not require you to proceed with the process. You can choose only one bank to proceed with, with the proposal that best suits your household.

Yes, it seems like a complex process. And that's why credit intermediation professionals are here! With their mediation services between you and the banks, they handle all the bureaucracy in the various stages, free of charge. Through the help of a Poupança no Minuto agent, this process becomes simplified.

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