Find out which is the best mortgage for you

Types of Home loans

Home Credit to buy a house: this is the most usual type of Home Credit and it is destined to those who need to ask for a loan to buy a house. The banking institution can finance between 80% and 90% of the value of the property. This type of loan has several fees and taxes associated. You can choose for a Home Credit with fixed, mixed or variable rate;

Housing loan with renovation work: Buying a house that needs renovation can be a good option because, besides being cheaper, it allows you to do the work as you want. However, the question is complicated if you don´t have money for the remodelling. Banks have thought about that and some institutions already offer housing credit options with works included. In these cases, the property evaluation process is different from a common credit. The house is evaluated according to its current state of conservation and an estimate is made of its value after the conclusion of the works, according to the budget presented. Initially the financing is made for the acquisition and the amount for the works will be released in tranches, according to the evaluation of the works;

Housing loan for construction: This type of Housing Loan is for those who want to build their own house, whether they already have the land or not. Nowadays, several credit institutions offer products that encompass the purchase of the land and the construction. In this situation, the credit is made available in instalments (between three and six), as the work progresses. Throughout the process, the construction is inspected by an expert from the bank, so that the instalments can be released. A great advantage of this type of credit is that you can benefit from a grace period during which you will only pay interest. This period can vary between 24 and 36 months;

Home loans for disabled people: There are home loans for people with a degree of disability equal or superior to 60% and that intend to build, buy, amplify or perform house maintenance works. They are called subsidised credits;

Housing Credit for renting and second home: this type of Housing Credit is for those who want to buy a property to obtain some income by renting it or to buy a second home, such as a holiday home. In these cases, there are some rules to be fulfilled and the financing conditions will always be different from those applied to a first home, in terms of rates, for instance;

Housing Credit for modular houses: this solution of Housing Credit is recent. With the growing popularity of this type of constructions, banks were forced to create a financing adapted to these situations. Nowadays, there are already several banks that offer a type of Home Credit destined to the purchase or construction - permanent or secondary - of this type of houses;

Home Credit to buy property from the bank: this loan is similar to Home Credit since it is also destined to those who want to buy a house. However, as in this case the property belongs to the bank, special financing conditions are offered, and in many cases 100% of the value of the property can be financed;

Housing Credit for non-resident foreigners: Not all banks approve housing credit for non-residents. However, there are several that allow it, but, as a general rule, the conditions are more demanding and may be subject to some limitations: maximum financed amount; percentage of financing versus guarantee; maximum payment term. The reason for these differences lies in the fact that in the event of payment default, it is more difficult to take legal action.  The same scenario applies in the case of Home Loans for Portuguese living abroad.

Housing credit with guarantor: is it always necessary?

One of the obligations when you apply for a home credit is to assure the bank that you have the financial conditions to pay the loan. If, for some reason, the bank considers that there is some risk of default, it requests a guarantor. The guarantor is a third person who acts as a guarantee of payment of the loan in case the holder or holders are no longer able to do so. 

However, this assessment of conditions varies from bank to bank, and if you are required to have a guarantor at a particular bank, it does not mean that all of them will do so. Each bank has its own risk policy and criteria to define whether or not a process needs a guarantor to be approved.

If you don´t have someone that can be your guarantor or if you prefer not to resort to this modality, consult more than one bank and it is possible that you can get your credit approved without resorting to a third person.

Amortizar Crédito Habitação: new rules in 2023

The approval of the State Budget for 2023 brought some changes in what concerns the amortisation of the Home Credit. Thus, in 2023 those who have savings or a Retirement Savings Plan can choose to use that money to amortise the variable-rate mortgage, without having to pay the early amortisation commission that was, until now, foreseen. 

Regarding the use of the total or partial balance of the PPRs to amortise the debt of the home loan, they will also be exempt from penalties for having taken advantage of the tax benefit associated to these savings plans.

These measures aim to counteract the rise in interest rates that could lead to an increase in indebtedness and default by many families. 

As you can see, for each specific need there is a bank product for home loans. See which one best suits your situation and good deals!

Source: Imovirtual