Pre-approval of home loan: What comes next?

Pre-approval of home loan: What comes next?

The mortgage application process goes through several stages, starting with the submission of documents to the bank. Next, the bank needs to evaluate if the credit holders are eligible to proceed, and only then is the credit pre-approved. But what comes next?

11 Aug 20233 min

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First: Document submission to the bank.

The first step to apply for a home loan is the submission of documents to the bank from whom you intend to borrow.

With this documentation, the bank will evaluate if the applicants have sufficient financial capacity to pay a monthly installment of credit.

Only after this factor is clarified, the credit is pre-approved or not.

I got pre-approved for credit, what now?

If, after analyzing documents, the bank determines that the proposed loan applicants have the capacity to contract, it is possible to have a pre-approval of the credit.

At this stage, banks make their proposals through the Standard European Information Sheet (FINE), detailing the conditions that each proposes. This includes the values, interest rates, loan terms, among others.

This is where you should analyze in detail the different simulations, to determine which one is most suitable for you and/or your family.

However, it is important to highlight that this phase does not require any commitment. It is possible to back out of the deal, even after requesting proposals and being pre-approved by more than one bank.

Continuing with the business, you must choose a proposal so that the process of buying a house continues.

The property evaluation follows:

After pre-approval of credit and selection of the proposal, the property evaluation follows. This phase is crucial to determine the amount of equity you need to make available.

This is because the value that the bank lends is usually up to 90%. And having to provide 10% in their own capital, it applies to the lower value between the acquisition and the appraisal. That is, for example, if the property is being acquired for 200 thousand euros and is appraised at 210 thousand euros, you have to pay 10% of 200 thousand euros.

But what is the property assessment? It is a process that evaluates the value of the property, based on factors such as location, features, and the condition of the house.

After this process and determining the amount on which you will have to give a portion in own funds, you have access to a final credit approval letter.

Final approval letter for credit.

The final approval letter decrees the final credit terms, already after the property evaluation. The bank is bound to this letter for 30 days, with no possibility of changing the proposed final terms.

In addition, between the final approval letter and the deed, there must be a reflection period of 7 days, so that future holders may ponder if they really want to proceed with the credit.

Writing and key in hand

Finally, after all mentioned phases, the deed of the property can finally be signed, completing the transaction.

It is in the deed that the necessary taxes are paid in the transaction of a property: Stamp Duty and Municipal Tax on Onerous Transmission of Real Estate.

Does it seem like a complex process? It may not be if you resort to the process mediation, through a fast and free service. With a credit intermediary Poupança no Minuto, you can get help throughout all these phases, so that you have the key to your house without complications.

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