Frequently Asked Questions
It’s a financial product offered by banks with the purpose of financing the purchase of a home. It’s a loan contract offered by a credit institution to a consumer during a previously established period. This solution can be used to acquire or build a home, as well as to perform works in owner homes or secondary homes or rented housing and to buy plots for construction of owner homes.
The European Standardized Information Sheet has a single format and is composed of two parts A and B (Bank of Portugal’s instruction number 19/2017). It’s a document that the credit institution must provide the client before entering a mortgage contract, a credit contract intended for the purpose of acquiring or retaining property rights over existing or projected land or buildings, or a mortgage and financial property leasing contract. This document contains the main characteristics of said financial product.
A guarantor is the person who provides a guarantee. They are responsible for paying the debt in case the debtor is unable to do so.
It is a form of guarantee offered by the guarantor regarding the fulfilment of the debtor’s obligation. When a guarantee is offered, the entire patrimony of the guarantor can be used to pay the debt. Normally, the guarantee’s limit is that of the debt it is guaranteeing.
It’s a financial product offered by banks with the purpose of financing the purchase of a home. It’s a loan contract offered by a credit institution to a consumer during a previously established period. This solution can be used to acquire or build a home, as well as to perform works in owner homes or secondary homes or rented housing and to buy plots for construction of owner homes.
The effective annual rate measures the total annual cost associated with a loan. This includes interest and other charges associated with said loan, namely insurances and commissions. Most banks do not lend to customers with an effort rate of more than 35%.
The nominal annual interest rate is the rate at which interest is charged. In the case of variable rate loans, the annual nominal rate is the value of the spread’s indexed value.
The nominal annual interest rate is the rate at which interest is charged. In the case of variable rate loans, the annual nominal rate is the value of the spread’s indexed value.
The global effective annual rate of charge measures the total cost of the credit for the consumers, expressed as a percentage of the annual credit amount. It’s different from the TAE (effective annual rate) because it includes associated taxes. This rate is used to measure the cost of credit for mortgages, other property-related credits and for consumer credit. It’s made available in the pre-contractual information provided to clients.
The spread is the profit margin of credit institutions in mortgage contracts. It’s different from bank to bank. It varies from bank to bank. Spreads change depending on the loaned amount, the financing percentage and, in some cases, on the loan term. The consumer’s own capital and their subscription of other financial products can also influence the spread.
The cost of the borrowed money or the return of a financial application, expressed as a percentage of capital.
Charges are different from bank to bank. These can involve study commissions, preparation of documents and process-opening, formalization, and evaluation procedures. You also need to consider the municipal property tax (IMI) and the municipal tax on onerous transfers of real estate (IMT).
Life insurance, which includes death and disability, with a similar capital to that of the loan’s amount. This will ensure the debt is paid in case of death and disability.
Multi-risk home insurance will be used to pay for fire or earthquake damage. damage. The value of this insurance must be that of the reconstruction cost of the property.
The consumer can choose the insurance company if the policy has the necessary coverage and complies with the minimum requirements of the bank.
In this type of loan, financing is made available in different installments (tranches) according to the client’s needs.
These are used in construction loans and home improvement loans. Financing is made available in installments as the work progresses and is dependent on inspections. During this time, there is a grace period, which means that the client only pays interest. Once the works are completed and the loan granted in its entirety, the client starts paying capital installments as well as interest.
It is the borrower’s main home and the center of their familial life.
A mortgage is a real guarantee that gives the creditor the right to be paid the value or income of certain properties or equivalents owned by the debtor or third parties. This is a preferential right over other creditors who do not have this guarantee or registration property. Mortgages can be legal, judicial, or voluntary, the most common ones.
A situation of default is one whereby the debtor is unable to fulfil, in due time, the duties of their credit contract, namely not paying the full amount of an installment. Until the contract termination, the debtor is in delay. Once the contract is terminated, default becomes permanent and all amounts that are due need to be paid.
Indexing is connecting a certain variable to a reference indicator (for example, basing the calculations of the variable interest rate on the Euribor).
The reference indicator is the interest rate that is chosen as a reference for loans or deposits at a variable rate. The applicable interest is calculated based on the nominal interest rate, which, in the case of variable rates, is the sum between the indicator and a spread. Normally, the Euribor is used as a reference indicator. For credit contracts, the value of the reference indicator is reviewed with the periodicity of the period it refers to (for example, 3-month Euribor, 6-month Euribor, 12-month, etc.).
When the deed is being prepared, and the property being sold or transferred has a mortgage, this protocol avoids the need for a discharge of mortgage document and the deed is signed under the APB protocol. The bank acting as creditor receives an electronic transfer from the bank acting as lender. Thus, there is no need for a bank employee to be present on the day of the deed or for a discharge of mortgage document to be presented. The request is filled out by the client acting as seller with the bank where the mortgage is registered.
