1. What to analyze in a home-for-sale financing?
If you are looking for homes for sale, be aware that financing to purchase your chosen home should also be a very important factor at this stage of your life. As such, write down these five characteristics that you should look into when comparing all the housing credits.
The interest rate on your loan may be fixed or variable. The fixed interest rate is agreed with the financial institution and, during the term of the agreement, it does not change. On the other hand, in the variable interest rate the monthly installment is modified according to the contracted period, because this rate is indexed to the EURIBOR, which has different review periods. It is also possible to contract a mixed interest rate. In this case, the customer contracts for a certain period of time a fixed interest rate and then changes to a variable interest rate.
The Euro Interbank Offered Rate (EURIBOR) is the average of the interest rates, for different maturities, to which the main European banks lend money to each other. These terms vary from one week to one year, and the EURIBOR will be longer than its term. It is common among the Portuguese to contract a variable rate indexed to the EURIBOR to 6 or 12 months, so you will find, in the simulations you make, one of these indexes.
The spread is an existing component in interest rates, which is defined by the financial institution for each housing credit agreement. In short, it is the profit margin the bank earns by granting financing to those looking for homes for sale.
Total Amount Attributed to Consumer (MTIC)
The MTIC is the total cost of the loan, including both the amount of the financing and the cost of interest rates and all other associated costs, including expenses and bank charges. In addition to interest rates, it is important to look at the total amount charged to the consumer so that you realize, when you compare all the offers in the market, what the lowest cost financing for you.
Annual Effective Annual Rate (APR)
Knowing this rate is very important in credit for those looking for homes for sale. The APR is a crucial factor for the comparison of housing credit since it includes interest costs, insurance associated with the loan and expenses and bank commissions. With regard to the real estate loan, you can later get a transfer of housing credit. This works in cases where it is already running and you want to lower the APR. Basically, it transfers the credit to another institution and thereby achieves a more competitive rate. If you later want to build your own home there is also construction credit as an option.
2. What to take into account in housing credit?
When applying for a loan to pay the property chosen from the various homes for sale, you must know some conditions and obligations that will have.
The purchase of a dwelling implies the payment of three different taxes. First, the Municipal Tax on Real Estate Transfer (IMT), which is a taxation of the right of ownership over real estate. The IMT has different incidence rates, depending on the location of the homes for sale, also varying in the value of the housing purchase. On the other hand, the Municipal Property Tax (IMI) is paid annually and is charged to all citizens who have their own housing. The incidence rate varies between 0.3% and 0.5%, depending on the municipality where the house is located, focusing on the equity value of the same. Finally, the Stamp Tax (IS) is paid in two moments. First, it is necessary to pay Stamp Duty at the time of writing the purchase of the houses for sale that is acquired. Here, the IS incidence is 0.8% of the acquisition value of the property. Secondly, Stamp Duty is paid from the moment the financing is placed on the current account. In this case, the incidence varies according to the term: 0.50% if the period varies between one and five years, and 0.60% if the payment term exceeds five years. In addition, the IS also levied on the bank charges that are required by financial institutions, at a rate of 4%.
The bank guarantees required by banks are a strategic way to protect themselves by lending money. By requiring certain guarantees, they have borrowed money safeguarded if the homeowner of the mortgage loan defaults. One of the bank guarantees is mortgage. It is necessary for the client to constitute a mortgage on the residence to be financed, allowing the bank to recover the value of the same case the client defaults. Another guarantee is the creation of a guarantor for the credit of homes for sale. Since this funding is usually of high amounts, the bank needs to be assured that its loan will be paid by someone if the holder defaults. In this situation, the guarantor will be responsible for the repayment of the loan.
There are two mandatory insurance when hiring a credit for those looking for homes for sale. Life insurance is one of them and although it is not required by law, it is required by banks. It is insurance aimed at the holders of the loan and aims to protect them (and the financial institution), covering the amount owed in case of death or disability of the holders. Another is the multirisk-housing insurance. Fire insurance is mandatory by law for those who buy a home on a horizontal property, but it is increasingly common for banks to require insurance with higher coverage, such as multi-homes. This insurance has several coverages, each consumer should choose the ones he considers best for his house. Depending on the location of the dwelling, you may consider it more relevant to choose certain roofs (such as seismic phenomena) over others.
3. How to get approval more easily?
To make it easier to get approval in financing for those looking for homes for sale, there are some aspects to take into consideration.
This rate is the percentage of total household income that is used exclusively for the payment of monthly installments of the credits contracted. Ideally, the effort rate should not exceed one third of the total income, ie 33%. If your effort rate is much higher than this percentage, you will be demonstrating to financial institutions that much of the income is used to pay off debts and, by contracting a housing loan, the rate will increase and you will be harder to meet. all monthly payments.
Having a good credit history is a plus for those looking for a home finance for sale. So if you have always paid your loans on time and if you have never been in default, you will find it easier to see your application approved. This means that you are more likely to fulfill your housing credit agreement and banks will privilege these consumers.
Stable employment situation
Financial institutions privilege consumers who have a secure professional situation. As a rule, this stable situation is an indicator that the risk of default is lower. Hence, banks tend to cede more loans to individuals with a fixed-term contract, who work in a large, financially secure company, or if the client already has some seniority in that job.
Homeowner loan holders
Hiring a credit if you look for homes for sale, alone or in conjunction with your partner, is very different for financial institutions. If there is more than one holder, the financing risk is diluted by two. Thus, in the event of one of the holders becoming unemployed, the other may bear the payment of the monthly benefits in full, preventing them from being defaulted.
Homes for sale
Many institutions have their own bank properties for sale in portfolio, which are listed as assets in their portfolio. These homes for sale from the bank usually allow those who purchase them to access credit housing with 100% financing. That is, in these cases of real estate of the bank for sale, the buyer does not need to give an initial entry (which is usually between 15% to 20% of the valuation value of housing). Acquiring one of these homes for sale is an easier way to access financing at the institution that owns the property.