There are collateral requested from the customer by banks when applying for mortgage loans. They may vary from institution to institution but, however, almost all of them only provide secured property loans. Have you heard of this type of loan? Do you know how to make a secured home loan in Portugal? Or how to compare different offers? Keep reading as this article gives you all the answers you need.
What is a secured home loan?
A secured property loan is a type of mortgage credit in which the borrower places a property as collateral.
The financial institution asks you to place the housing you are buying as collateral, and it will be mortgaged to the bank until the term of the loan expires. This is a way for the creditor institution to safeguard itself by reserving the right to keep the mortgaged property in the event of default by the debtor. The same is true for loans for the purchase of land for construction or for home work.
However, the collateral may be assigned to a property other than the mortgage loan. The only condition is that this is free of charge or other mortgages.
Imagine that you already have a house in which you live and want to buy a second home for vacation, in which case you can mortgage the second home in your current residence. However, the financial institution will always have to evaluate the housing that it intends to leave as collateral to understand whether the value of the housing covers all or only partially the value of the property it is purchasing.
How to make a home equity loan in Portugal?
To make a loan with a property guarantee in Portugal the financial institution requires the presentation of the documentation provided for it and duly signed, respecting the established requirements.
Although documents may vary from bank to bank, the requested documents are usually as follows:
# 1 – Review and Approval
- Identification document (from all holders): Citizen Card;
- Last IRS Declaration and respective Settlement Note;
- Declaration of contractual bond (issued by the employer);
- Past due receipts for the last three months or green receipts for the last six months (whichever is applicable);
- Bank statements from the last three months;
- Proof of IBAN.
# 2 – House Rating
- Building Passbook;
- Content Certificate;
- Property plan
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After submitting the proposal, the bank may take up to a few weeks to review the request and perform a risk analysis on its profile, advising its solvency, among other things, in order to decide whether it meets the requirements at the analysis level. risk to make a home equity loan. If the credit application is approved, a contract is signed between both parties to formalize the loan.
How to choose a mortgage?
All financial institutions are required by law to provide mortgage credit information available on the European Standardized Information Sheet (FINE). To make the appropriate comparisons you must ensure that all bids have the same deadline, amount and LTV, as well as the same rate type (variable or fixed). Only in this way will you then be able to gauge which proposals are most advantageous by looking at the APR and MTIC.
According to European law, the financial entity is required to give the customer a minimum of seven days to advise the terms of the collateralised loan for which they are interested in contracting. During this period of reflection you may give up the offer.
Before deciding which bank to take out a secured loan it is important to make a comparison based on the conditions that each institution offers. Do not forget that this is a heavy commitment in your life and should therefore be very well considered.