Mortgage: How to know if I have financial capability?

Let's proceed with the analysis of the feasibility of your mortgage credit right away? With the mediation of Poupança no Minuto, the process with the banks is taken care of in an instant. To understand how this phase is carried out in practice, read below.

First step: Sending documentation

In order to ensure that you have financial capacity to proceed with the hiring of a home loan, it is necessary to provide documentation to a credit intermediary, or directly to the banks. From there, the entities move forward with the evaluation of your income and determine if you have the ability to pay a home loan installment, as well as the maximum amount you can afford. [Link to website: financial capacity]

So, the first step is exactly that: gather some documents that describe, mainly, the incomes of the holders who are going to apply for credit. 

Let's review each one of them:

• Personal identification document;  
• Last IRS settlement note;
• Last IRS statement;  
• Income statement;  
• 3 last payment receipts;
• If applicable, green receipts from the last 6 months and a statement of commencement of activity.
• Document proving the contractual relationship provided by the employer.
• 3 last bank statements.
• Map of responsibilities of the Bank of Portugal.
• IBAN Proof of Payment
• Proof of address.

Second step: Ensure financial capacity

From there, the bank advances with a feasibility study, analyzing your effort rate, to verify if you have financial capacity. Being able to support a home loan installment, the entity also declares the maximum value it is able to pay for a property, considering its financial context.  

But what is the effort rate? This concept represents the relationship between the total monthly income of a household and expenses with loan installments. For example, if a couple is applying as holders of the home loan, the incomes of both are taken into account.

The ideal effort rate, according to the Bank of Portugal, should be between 30% and 34%. If this couple receives a total of 3,800 euros per month, the maximum amount they can pay in credit installments is 1,500 euros (1,500/3,800) x 100 = 34%. So, if they pay 500 euros for a car loan, they can only have a housing credit installment corresponding to 1,000 euros.

This is the calculation that must be done to determine the effort rate, which the bank will analyze. Some banks approve effort rates up to 40% and others up to 30%. Therefore, it is essential to ask for proposals from more than one bank.

Third step: Find the property for pre-approval of credit.

After determining the maximum installment value for the mortgage, it's time to choose the property (based on the values ​​indicated by the bank in the feasibility study).  

After the real estate search phase, with or without the help of a real estate agency, contact the banks with the specific value in question. At that moment, the banks redo the simulations and issue the pre-approval of the credit.

It is important to note that you can always request simulations from various banking institutions and obtain more than one pre-approval. This phase does not require you to proceed with the process. You can choose just one bank to move forward with the proposal that best suits your household.

Yes, it seems like a complex process. And that's why credit intermediation professionals are here! With their mediation services between you and the banks, they handle all the bureaucracy in various phases, for free. With the help of a Poupança no Minuto agent, this process is simplified.