A home loan or mortgage consists of obtaining money to buy, refinance or improve a home. Before applying for a mortgage loan, you should take into consideration the following recommendations:
- Find out the current interest rates: You will need to do internet searches or call several mortgage lenders to get this information.
- In Portugal, the reference interest rate is the Euribor, and you must know that the French method is used; that is, in the beginning, you pay most of the interest, and they are reduced as the years go by. For this reason, the less time you choose to repay the loan, the less interest you will pay.
- Look for information in different banking entities: with the information provided by various banks, you can compare the other loans and terms. Likewise, you must ask for the requirements that they put, that is, what they ask of you to give you those conditions: life insurance, home insurance, direct debit payroll, cards, pension plans, etc.; this is very important because it will provide you with the information of the total amount that you are going to have to pay throughout the year. Likewise, it is essential to see both things, since if you have a low-interest rate, but the requirements are many, you will pay more than with one that asks you for fewer requirements and a higher rate.
- Find out if they work with fixed or variable interest: variable interest rates can vary during the mortgage period, so you only have the security of the amount of the letter during a period, and it is usually reviewed after six or twelve months. The fixed rate is usually a little higher than the variable, but this gives you the peace of mind that you will always pay the same letter and not change over the months and years.
- Most banks ask for an initial contribution of 20% of the price of the house. However, some banks grant you 80% of the appraised value, which in some cases is higher than the sale price.
