What are the requirements for an approved housing credit?

What are the requirements for an approved housing credit?

In order to apply for a home loan, it is necessary to meet certain conditions in order to have the proposal approved. In this article, we list the 4 requirements that you must meet in order to buy your home through a home loan.

10 Aug 20234 min

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Documentation required to submit to the bank.

The first guarantee you need to consider when applying for a home loan is to ensure that you have all the necessary documentation.

To hire a mortgage loan in order to buy a property, the banking entity requires the following documents:

Identification of holders;

Fiscal Identification Number (NIF);

Last income tax statement;

- Three last payslips;

Three last bank statements;

Credit responsibilities map without occurrences.

Therefore, once you have gathered all this documentation, you can proceed with the loan application to the banks.

2. Effort rate within the maximum limit.

Afterwards, and based on the documents you handed to the bank, an analysis is made of your income against your expenses with credits. This factor is called the effort rate.

As a rule, banks allow an effort rate of up to 30%, but the recommendation from the Bank of Portugal is that the rate does not exceed 35%. This is so that banking institutions protect themselves against the risk of default by customers. Therefore, pay attention to the recommendations:

0%: Very high
35 to 40%: High
30% & < 34%: Ideal
= <30%: Maximum Ideal

Therefore, the bank will proceed with the calculation of your effort rate to understand the amount of income earned by the household versus credit installments. If, already accounting for the housing credit installment, the effort rate exceeds 35%, the bank may not approve your credit, subject to exceptions.

3. Own capitals for the initial entry

In addition, to proceed with the hiring of the housing credit you need to have a certain amount of own funds to make an initial payment to the bank.

In other words, currently banks do not finance mortgages at 100%, so it is always necessary to provide a portion of the value of the house.

If it is a secondary own housing, banks finance up to 80% of the property value, and if it is a permanent own housing they lend up to 90% of the property value. Therefore, at least, between 20% and 10% will have to be made available . Note that these percentages will apply to the lower value between acquisition and evaluation.

For example, if the house you are buying for permanent residence has a sale value of 250 thousand euros, but was appraised at 220 thousand euros, and the bank made a loan offer of 90%, you will have to provide 22 thousand euros (10% of the lower value).

4. Capital available for payment of taxes and process expenses

Furthermore, you still need to have available capital to pay two taxes and for the bank processing fees. These may still be high amounts.

In property registration, you have to pay: Stamp Duty and Municipal Tax on Onerous Property Transfers (IMT).

Regarding values: Stamp Duty represents 0.8% of the property acquisition value, and IMT applies to the higher value between the acquisition value and the Tax Asset Value (VPT). However, the IMT value already varies according to some factors: the rate to be applied can range from 1% to 8%, depending on the property value, the location of the house, and its purpose.

However, it is possible to be exempt from paying IMT in certain situations, such as situations where the property for permanent and own housing is not greater than 97,064 euros in the mainland and 121,330 euros in the Autonomous Region of Madeira and in the Azores.

As for process expenses, they are related to bank commissions, such as appraisal, opening and process study, formalization, and the cost of mutual registration with mortgage. The commission values ​​can range from 500 to 1,300 euros, and a mutual registration with mortgage in Casa Pronta costs 700 euros.

If you need help confirming that you meet all the necessary requirements for hiring a home loan, you can turn to a credit intermediary Poupança no Minuto. With a quick and assertive response, the mediators help you in all phases of the process for free.

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