Mortgage Credit Process

Mortgage Credit Process

Mortgage Credit - Credit on a property, usually the home of the borrower (the person applying for the loan). A credit agreement is established that serves as a guarantee for the payment of the loan, if the installments are not paid in time. In this case, the borrower loses the property as a way of settling the debt.

 

Documents required for simulation:

Copy of your ID/ Passport

Fiscal Number

Letter of Employment

P60 From Last year or the Present year (or both)

Last 3 Months Payslips

Last 3 Months Bank Statements

A List of Assets and Liabilities

Credit Report Credit

 

Extra Documents (if applicable)

Proff of Dividends Payment(s)/Profit Shares

Proof of Rental Income(s) on Any Property/Investments

 

Credit Costs:

Real Estate Appraisal - between 300 € to 400 € with VAT included;

Dossier commission - between 250 € and 350 €;

Preparation of Minutes of Deed - around 100 €;

Mortgage Credit Life Insurance (depends on the amount covered and the age of the borrower);

Multi-risk Housing Insurance (depends on the amount of coverage);

Bank Account Management Fee (depends on the bank);

Cross Selling (complementary products, eg credit card).

 

Comparative Rates

TAN (Annual Nominal Rate) - rate that reflects the interest on loans;

APR (Annual Effective Charge Rate) - reflects:

- Interest;

- Commissions;

- Expenses, namely with taxes and fees related to the registration of the mortgage, in the case of a credit with a mortgage guarantee;

- Insurance required to obtain credit;

- The current account maintenance fee, the opening of which is mandatory for the management of the loan;

- The renumbering of the credit intermediary, if this renumbering is paid by the consumer, which happens when he uses an unrelated credit intermediary;

- Other charges associated with the credit agreement.

 

 

Credit Repayment

Contract Terms

According to the Banco de Portugal macroprudential measure approved on January 30, 2018, the maximum maturity of the loans must be complied with, the maximum:

  1. 40 years on new mortgage and mortgage-backed or equivalent credit agreements and,
  2. gradual convergence to an average maturity of 30 years by the end of 2022.

 

Repayment method

  1. Variable rate indexed to Euribor

1.1 Pure;

1.2 With mixed services;

1.3 With fixed installments;

  1. Fixed Rate
  2. Mixed Rate

 

Euribor

The Euro Interbank Offered Rate, which appeared on 01/01/1999, is the rate offered by the major banks in the euro for accepting deposits at different terms from other banks in the same class. Reflects the cost of funds for eurozone top banks.

 

Variable Rate

As its name implies, it fluctuates according to fluctuations in reference interest rates in the market, being indexed to EURIBOR.

 

Flat Rate

The same is agreed between the borrower and the bank - it will remain unchanged throughout the term of the loan (or the agreed term). Whatever happens, the borrower will always pay the monthly fee that was established in the contract.

 

Mixed Rate

Credit with a fixed rate in a given period (usually at the beginning of the term) and with a variable rate in the remaining period.

 

Mixed Installments

Mode in which the installments start very low and grow during the first years, remaining from that date constant (if the market rates do not change) until the end of the loan.

Fixed Installment

Installment does not change over the period of the loan. To cope with fluctuations in EURIBOR, the term of the loan may change.

 

Penalty for early repayment of the loan:

. Variable Rate: 0.5% of the amortized amount;

. Fixed rate: 2% of the amortized amount.

 

Credit Guarantees

 

Mortgage

The property that is being acquired and / or “support” property. The mortgage gives the bank priority over other creditors in the receipt of money that may result from the sale of real estate, should the consumer enter into a default situation.

 

Bail

The guarantor is the person who gives personal guarantees (through his assets) for the payment of debts of a debtor, in the form of a guarantee. Thus, if the borrower fails to pay the credit installments, the spun is called upon to repay the loan. A guarantor is bound to the loan until the credit is paid: he cannot give up being a guarantor in the middle of the contract.

 

Guaranteed promissory note

Similar to bail, it is a personal guarantee. In the certified promissory note, the guarantor undertakes to pay the amount defined in the promissory note, in case the debtor enters a situation of default. The guarantor cannot invoke the benefit of the previous excussion, that is, the assets and all the assets of the guarantor can be called upon to pay the debt, even before the assets of the original debtor have been foreclosed.

 

Pledge of movable property

In this case, if the debtor defaults, the credit institution has the right to make itself paid, with priority over other creditors, for the value of the sale of these assets. In this case, goods such as automobiles, or even investment securities, such as shares or bonds, are included.

 

 

Mortgage Credit Life Insurance

There are two main types, namely:

Total and permanent disability - it is the most recommended, as it covers what the National Disability Table defines with a situation of disability resulting from a disease or an accident, the consequences of which resulted in a degree of disability greater than 60% or 66% (depending on the insurer).

 

Absolute and permanent disability - only cases of disability resulting from illness and / or accidents benefit from this protection, which prevents policyholders from maintaining any renumbered profession. They cover situations in which policyholders receive permanent assistance from another person to perform basic routines.

 

Multi-risk Housing Insurance

Multi-risk insurance includes protection for various risks, the selection of which is already predetermined, although it is possible to add other coverages.

 

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