What are the requirements for an approved mortgage credit?

Documentation required to submit to the bank.

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

To contract a mortgage loan in order to buy a property, the bank requires the following documents: 

Identification of the holders.

Tax Identification Number (TIN);  

Last IRS statement.

Three latest pay slips.  

Three latest bank statements.

Credit responsibility map without occurrences.

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

Effort rate within the maximum limit.

Afterwards, and based on the documents submitted to the bank, an analysis is made of your income in relation to 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 of the Bank of Portugal is that the rate does not exceed 35%. This is so that banking entities protect themselves against the risk of default by customers. So, pay attention to the recommendations: 

0%: Very high 35 to 40%: High 30% and < 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 the credit installments. If, already accounting for the housing credit installment, the effort rate exceeds 35%, the bank may not approve your credit, with exceptions.

3. Equity for the initial investment.

Furthermore, to proceed with the hiring of the housing loan it is necessary to have a certain amount of equity to give as an initial payment to the bank.

That is, currently banks do not finance mortgages at 100%, so it is always necessary to pay a portion of the house value.

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. So, at least, between 20% and 10% will have to be provided. Note that these percentages will be applied to the lower value between the acquisition and evaluation value.  

For example, if the house you are buying for permanent residence has a sale value of 250,000 euros but was appraised at 220,000 euros, and the bank offered a loan of 90%, you will have to provide 22,000 euros (10% of the lower value).

Capital available for payment of taxes and process expenses.

In addition, you still need to have available capital to pay two taxes and for bank processing expenses. These amounts can still be high.

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

As for values: Stamp Duty represents 0.8% of the property acquisition value, and IMT is levied on the highest value between the acquisition value and the Tax Asset Value (VPT). However, the IMT value already varies according to some factors: the applicable rate 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 when the property for own and permanent housing does not exceed 97,064 euros in the Continental and 121,330 euros in the Autonomous Region of Madeira and the Azores.

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

If you need help confirming that you meet all the necessary requirements for hiring a housing 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.