I have a home loan. Can I take out another loan?
One of the most common questions that arises after taking out a loan is whether you can take out another for a different project. For example, a house and a car are usually among the most important projects, and many need financing to acquire both. But how can you know if you have the financial capacity for both?
Want to simulate your specific case? Contact Poupança no Minuto to help you with credit intermediation, evaluate your financial capacity, and, if you decide to move forward, choose the best proposal in the market. Or understand, first, which factors to analyze to get a bank loan approved.
To hire a second loan, you must have financial capability.
So, the question arises: Can we hire another credit, like a consolidated credit, personal, works or car, after having contracted a mortgage credit, or vice versa? The answer is simple... it will always depend on the financial capacity of the household.
When applying for a loan, in order for it to be approved, the bank analyzes the family's income through the effort rate and the Debit Service-to-Income (DSTI).
- Effort rate that covers the benefits
The first factor that is evaluated is the effort rate of the household that applied for credit. And what is the effort rate?
The effort rate is the ratio between the total income that a family receives compared to the amount they pay in credit payments. Note that the income of the credit holders is taken into account.
In other words, if a couple is going to apply for, for example, an car loan together, and both holders receive monthly income of 3,500 euros, but already owe a total of 700 euros per month in loan installments, the effort rate will be calculated based on these two values. Thus showing us the amount available for a new loan and other expenses in the budget (such as groceries, transportation, education, fuel, etc).
The effort rate is calculated based on this formula: (Loan installments/Monthly income) x 100. Therefore, in the above case, the effort rate with the housing loan corresponds to 20%. Now considering that a monthly installment of a car loan would be 300 euros, the couple would have a monthly debt amount of loan installments equal to 1,000 euros. Therefore, the effort rate would become 28.6%. And what does this mean?
In this case, it means that the bank would approve a second credit to this couple. This is because, according to the recommendations of the Bank of Portugal (BdP), the ideal effort rate should be up to 34%, with between 35% and 40% being high, and over 40% very high. However, in exceptional cases, banks have approved effort rates up to 50%.
- DSTI that does not exceed the limit
There is also another factor that banks take into account for the approval of a credit, which is the Debt Servico-to-Income, which represents the degree of financial effort of a client relative to a debt.
According to the recommendation of the BdP, to acquire a new credit, the monthly income of the applicants should not result in a DSTI higher than 50%.
To ensure that applicants maintain 50% of their income available after settling credit installments, banks apply a stress factor under the current interest rate. This factor was, until recently, 3%. However, the BdP eased this test by decreasing the stress factor to 1.5%.
So, taking the example above, if with the stress test of 1.5% applied to the interest rate of the credit they want to contract, the couple ends up with a total of monthly installments equal to 1,200 euros, we must calculate the DSTI in the same way: DSTI = (Monthly installments / Monthly net income) x 100.
Therefore, the couple would have a DTI of 34.3%, which is far from the 50% limit imposed by BdP. This means that the probability of the couple being able to get a car loan approved, after the housing loan, is high.
These two factors that banks implement to evaluate the financial capacity of applicants have as their main objective avoiding default situations, and preventing families from facing indebtedness.
However, an important note to highlight: If you want to hire a personal loan for the own capitals necessary for the initial process of the housing credit, you no longer have that possibility, even if you have a sufficient effort rate. Banks do not allow the simultaneous hiring of the two credits.
Did the math and have a budget to move forward with the second loan? Let's do it! Poupança no Minuto offers a free credit intermediation service that can save you from bureaucracy, communication with banks, and comparing proposals. Besides saving in your pocket, it ensures the most suitable market proposal for you in terms of cost-benefit. Contact us and hire your new loan well accompanied!