Guide with everything you need to know to apply for a mortgage loan.
Acquiring a home is one of the biggest investments in a person's life. For many, this involves resorting to a housing credit. This guide offers a comprehensive overview of the main aspects to consider when contracting a housing credit, from comparing proposals to the final deed.
8 steps you must be aware of to apply for a mortgage loan.
Hiring a mortgage is a complex process that requires attention to various details.
Understanding the terms and conditions, comparing proposals, and evaluating financial capacity are essential steps to make an informed and secure decision. Let's see the 8 steps you should follow in contracting this loan.
Understand credit proposals: APR and Total Amount to be Paid.
Before choosing a credit proposal, it is essential to understand the indicators that reflect the total cost of the loan:
- APR (Annual Percentage Rate): Represents the total cost of credit, including interest, commissions, taxes, and other charges, expressed as an annual percentage.
- MTIC (Total Amount Charged to the Consumer): Indicates the total amount that the consumer will have to pay throughout the contract, including the borrowed amount and all related charges.
When comparing proposals, choose the one with the lowest APR and MTIC, as long as the conditions are similar.
Analyze the KID: Key Information Document Europe.
The FINE is a standardized document detailing all conditions of the proposed mortgage credit by the bank. It includes information on the loan amount, interest rates, terms, required guarantees, among others. This document allows for transparent comparison of proposals from different banks.
Pre-approval and property assessment process.
After sending the documents to the bank, it evaluates the client's financial capacity. If approved, a credit pre-approval is issued.
The property assessment follows, where the bank determines the property value for financing purposes.
The loan amount is typically calculated based on the lesser value between the purchase price and the appraisal value, known as LTV (Loan-to-Value).
Understanding the LTV ratio.
LTV is the ratio between the loan amount and the property value. To calculate this ratio, banks consider the lower value between the purchase price and the property appraisal value. This method aims to protect both the bank and the client from possible property devaluations.
Types of interest rates: Fixed, variable, and mixed.
- Fixed rate: The interest rate remains constant throughout the loan period, providing predictability in monthly installments.
- Variable rate: The interest rate can vary over time, usually indexed to Euribor, which can result in monthly payments being lower or higher, depending on market fluctuations;
- Mixed rate: Combines an initial period with a fixed rate, followed by a variable rate. This option has been increasingly adopted by customers, offering a lower rate initially, with the possibility of benefiting from decreases in the Euribor.
Evaluate financial capacity: Effort rate
The effort rate represents the percentage of the monthly income of the household destined for the payment of credit installments. Banks recommend that this rate does not exceed 35%, thus ensuring a financial margin for other expenses.
It is important to note that the food allowance, even when paid by card, is considered as regular income for the calculation of the effort rate.
Costs associated with mortgage credit
In addition to interest, there are other costs to consider:
- Bank commissions: Charges collected by the bank for the analysis and granting of credit.
- Mandatory insurance: Such as life insurance and multi-risk insurance;
- Taxes: Including Stamp Duty and IMT (Municipal Property Transfer Tax);
- Registration and notary expenses: Costs associated with the formalization of the deed and registration of the property.
Writing and formalization of credit
After final approval of the credit and property evaluation, the deed is scheduled. At this moment, the purchase of the property and the housing credit contract are formalized. Payments for taxes and other associated expenses are made at this time as well.
Hiring a mortgage credit is a decision that can have a great financial impact, but with prior information and a thorough analysis of the various options, it can become lighter.
Using credit intermediaries is a advantageous action, providing specialized guidance and facilitating the entire process, at no cost! Contact the agents of Poupança no Minuto or simulate directly, and start today: