Buying the first house is a challenge and a dream for many young people. Having a space of their own where they can receive friends, make dinner for the family, wake up at the time they want without disturbing anyone, or watch series late into the night sitting on the sofa without worrying about the time. Or, simply, buying your first home to start the adventure of living together. However, not everything is easy in life and, when buying your first home, there can also be unforeseen events. But overcoming them so that everything ends well and you have the key to your house in your hand is simple: be as well informed as possible and know what you can count on.
The first thing you have to do is do math. You want to own a house, but you need to know what you might have to spend on buying the house and then what you’re going to spend when you’re living in it. Being prepared is the best strategy so that everything goes well and you can enjoy your new home in peace. And, of course, your monthly budget must be enough to cover all monthly costs. Don’t buy a house thinking about your future income, buy it based only on your current income. If your income increases, you can always sell that house and buy another one. Be prudent.
Buying a first home: what will I spend if I apply for a mortgage loan
If you are going to resort to housing credit, you must count not only on the monthly installment of the loan, but also on other charges such as bank commissions, insurance and taxes.
property appraisal commission
If you are thinking of applying for a mortgage loan, count the cost of property valuation.When applying for housing loans from a financial institution, thisthen make an appraisal of the property, based on this value that lends you the money to buy the house. Please note, it does not lend you the entire appraisal amount. assessment will be carried out by an expert appointed by the bank, but the cost of it will be yours. And even if the credit is not given to you, or give up on it. It is an amount that you will have to pay (around 200 euros). But if you buy a property that is being sold by the bank does not pay this commission.
Process study commission
It is commission is charged by some banks for analyzing and deciding on your credit application. And you will have to pay it even if the credit is refused. Before applying for funding see the price from the bank and see if you can be charged.
Most of the banks charge this commission if the financing materializes, the value of which varies from bank to bank. See if it appears in the bank’s price list.
This is one more value that you must have when moving towards the purchase of a house. As we mentioned, banks do not lend the entire appraised value of the property, only lend a maximum of 90% of its value if the housing is intended for own or permanent housing (80% in the case of a second home), compressing one of the prudential rules of the Bank of Portugal. initial) and it is one more value that you have to enter in your accounts. But there is an exception: sand buy a house that is in the bank’s portfolio, then the bank will be able to finance its full value. These are properties whose previous owners failed to pay the loan, with the bank having foreclosed on the mortgage that guaranteed it. Thus, they kept the property in return for the borrowed amount, and of course, as the bank’s business is not real estate, they would want to sell it as quickly as possible as a way of recovering the borrowed money.
For the amount you are going to borrow from the bank, pay a monthly installment during the agreed term for the loan. Note that Banco de Portugal recommends that the maximum term not exceed 70 years of age for the youngest borrower. credit at a fixed rate or at a rate indexed to Euribor. In the first case, you are “immune” to changes in interest rates, but in the second your installment will rise or fall according to the changes that occur in the Euribor. If you opt for a variable rate, you will still have to pay the spread, i.e. A percentage is added to the interest rate, which is the bank’s profit margin. In the case of the fixed rate, this will already be included in the rate proposed. financial entity must provide you with a European Standard Information Sheet (FINE) which will contain not only the interest rate, but also the other charges and proposed insurance costs. Heads up, these are not part of the benefit, they are added to it.Ask different entities for several proposals (or use a financial intermediary who will do the work for you free of charge).Read more: Euribor Simulator: The impact of rising interest rates on home loans
In proposals, you should pay attention not to the Nominal Annual Rate (i.e. the TAN) because it only represents the interest you will pay, but the Global Effective Annual Rate (APR) because this includes all the charges you have to bear throughout the loan. Represents the overall cost of credit.As it is presented in percentage, perhaps the simplest, to have a better idea of what you are going to spend with your loan until the end of it, will be to look at another value that appears in the FINE, the Total Amount Imputed to the Credit (MTIC) that represents in euros how much you will spend on your loan. Also read: TAN and APR: Find out what differences separate these two rates
When taking out a home loanyou also have to take out life insurance, whose insured capital is the amount that the financial entity lends you and the beneficiary of the same is the financial entity itself. The reason is simple, in case of any fatality, the insurance is triggered and pays the financial entity the amount still owed. that is, the loan will be paid. And his heirs keep the house free of debt.THE entity where you are going to take out the credit will propose that you take out the insurance with itsometimes they even offer a spread reduction if you do, but don’t have to accept🇧🇷 You can do this with any insurance company, respecting the capital value and naming the bank as beneficiary. And as prices vary greatly from insurer to insurer, it’s a good idea to ask for proposals, compare them and choose the one that best suits you. But, attention, You can only compare if they have the same coverage.
This is another insurance that the entity where you take out the loan obliges you to take out. The reason is, once again, the fact that the bank wants to ensure that the property will retain its value. Thus, in the event of a fire, the insurance company will cover the costs of repairing or rebuilding the property.
Stamp duty on bank commissions and credit amount
Also count on taxes on commissions you pay to the bank, on interest and on the amount they lend you.We can say that the amount of stamp duty on commissions is marginal, since you will have to pay 4% on their value. The 4% stamp duty is also levied on the interest. (will be in the monthly installment). The sel taxo on the amount you were loaned is 0.6% on this value, so it can be significant.
What will you spend on buying the house
When buying your first home you will have to do the respective deed and pay the taxes corresponding to the transaction you are carrying out.
THE deed is a contract between two partiess: the one who sells the property and who is going to buy it. Only after the signature of the deed does the property become legally yours. act of writing can have two distinct moments: the purchase and sale agreement (the deed) and if the purchase is made with a home loan at the same time, you will also have to sign the respective loan agreement with mortgage. This contract will contain all the conditions of your loan.The deed can be carried out at Notary Public Offices, Land Registry Offices or even through the Casa Pronta service. O cost of the deed varies depending on the purchase price of the house, whether it is a permanent or secondary home🇧🇷 Thus, there is no certain value, but it will be charged as you are going to buy the property. And you will also have to count on notary and registration expenses.However, to get an idea of what you might have to pay, if you choose to go to a Ready House Counter count on a value of up to 700€ if you have resorted to mortgage loans, and with half of the purchase with own capital. The values will be different if you choose to go to a Notary Office, tEach one has its own table, so ask for the price before deciding where to do your deed.
Municipal Tax on Real Estate Transfers (IMT)
This is the tax to be paid when writing the deed. IMT is variabledepending on the value of the transaction (that is, the higher value between the book value and the sale value), type of property, whether or not it is a permanent home and the location of the property. Doctor Finance to know how much you will pay.
What will you spend after buying your home
Once you have the key in hand, don’t think that your home expenses are over🇧🇷 You will have to take into account recurring expenses with the house and we are not talking about electricity, water, gas and telecommunications bills.
Municipal Property Tax (IMI)
O IMI is an annual tax levied on the property value of the property🇧🇷 The rates of this tax are set annually by the Municipality where the property is located. You can check the IMI rate you will pay on the Finance Portal.
O fire insurance is mandatory for all properties in horizontal fraction. In other words, they are part of a building. And for that reason, even if you have not bought your home without a mortgage, you will still have to take out one. in case of fire, the insurer will cover the reconstruction of the property🇧🇷 But there are more reasons: if the fire results in injuries or other damages, in case of not having insurance all costs will be paid by you. If the injured person becomes unable to work, he will have to pay a compensation for life.Insurers usually associate other coverage with fire insurance, hence the name multi-risk. They cover for example floods.
If you live in a property on horizontal property, count on this value. It will be fixed annually by the Assembly of Owners.