The answer is simple: it can influence it, but it does not mean the application will be rejected.
Banks analyse all your existing credit commitments
The bank assesses your income and all current financial obligations, including:
• Car loan
• Personal loan
• Credit cards with used limit
• Credit lines
• Other financing in your name
All this information is reviewed through your credit report from Banco de Portugal.
The key factor: Debt-to-income ratio
The debt-to-income ratio is one of the most important criteria in loan approval.
Banks use this indicator to assess whether you still have enough financial capacity to cover all your expenses.
How do banks calculate it?
Although a “healthy” debt-to-income ratio is often considered to be between 30% and 40%, the actual assessment is stricter.
Banks calculate the DSTI (Debt Service-to-Income), which represents the percentage of monthly income committed to all loans.
In addition, they simulate a scenario where interest rates increase in the future, adding a safety buffer to the mortgage payment (+1.5%).
As a rule, this calculation should not exceed 50% of the household’s net income.
Calculate your debt-to-income ratio using our simulator.
Do car loans or credit cards affect approval?
Not necessarily, but they can reduce your borrowing capacity.
For credit cards, the bank may consider:
• Current outstanding balance
• Associated monthly payments
• Available credit limit
• Number of active cards
Does a personal loan make it harder?
Personal loans usually have higher monthly payments and interest rates, which significantly impact the analysis.
What can I do to increase my chances of approval?
If you have other loans and want to buy a home, you can improve your financial profile:
• Pay off small loans before applying
• Reduce credit card balances
• Avoid taking on new debt in the months before applying
• Consolidate debts (in some cases)
• Increase your down payment
Small changes can significantly improve your chances of mortgage approval.
Simulate your mortgage here or speak with our team through the contact form.