The required documentation varies from bank to bank, but the essential documents for a standard home loan application are:

• Citizen Card or Identity Card and Tax Identification Number;

• Most recent IRS tax return and settlement notice;

• Copy of the last 3 pay slips;

• Employer’s declaration;

• Location plan of the property;

• Floor plan of the building or unit;

• Proof of other income.

Additional documents may be required depending on the bank and the client’s specific situation (e.g., pensioner, employee, non-resident, among others).

Having an account with the institution where you want to take out the loan is not mandatory. However, most banks require it.

The spread is a percentage of the interest rate charged by the bank, which essentially represents its “profit margin.”

The EURIBOR (Euro Interbank Offered Rate) is a rate that reflects the average interest rates of loans between banks. The EURIBOR is a variable rate, and its adjustment in loan contracts occurs every three, six, or twelve months. In Portugal, home loan contracts are usually indexed to the EURIBOR.

The Nominal Annual Rate (TAN) is the rate communicated by banking institutions and applied to all types of operations, whether financial investments or loans that involve interest payments. In the case of a variable-rate home loan, it is simply the sum of the spread and the EURIBOR.

The APR (TAEG) can be used to compare loan offers. For loans with the same amount, term, and repayment method, the offer with the lower APR is the cheapest for the client.

The APR calculation includes:

• Interest;

• Commissions;

• Expenses, including taxes and fees related to mortgage registration, in the case of a loan secured by a mortgage;

• Insurance required to obtain the loan;

• Maintenance fees for a current account, if opening the account is mandatory for managing the loan;

• Credit intermediary fees, if paid by the consumer, which applies when using a non-tied credit intermediary;

• Other charges associated with the loan contract.

It does not include:

• Amounts payable if the client fails to meet contractual obligations;

• Early repayment fees;

• Notary costs.

La TAEG puede utilizarse para comparar propuestas de crédito. Para préstamos con el mismo importe, plazo y modalidad de reembolso, la propuesta con la TAEG más baja es la más económica para el cliente.

The total amount payable by the consumer (MTIC) is especially relevant at the time the loan is taken out. Over the term of the loan, the interest rate or other charges may change.

For example, in variable or mixed-rate loans, the MTIC is only indicative. Since the interest rate can vary over time in these loans, the MTIC may not correspond to the total amount the client will pay during the loan term.

If other loan characteristics are similar:

• A loan with a higher interest rate will have a higher MTIC, as the interest paid will be greater;

• A loan with a longer term will have a higher MTIC, because more interest will be paid over the life of the loan compared to a similar loan with a shorter term.

You can use the MTIC to compare offers. For the same amount and term, the MTIC allows you to compare the total interest and other charges you will pay when repaying your loan.

Functioning as a guarantee against the risk associated with financing, there are two types of insurance that banks always require when applying for a home loan: life insurance and multi-risk home insurance.

Life Insurance
Although not legally mandatory, banks always require life insurance for granting a home loan. In simple terms, this insurance covers the outstanding loan amount in case of death or disability of one of the borrowers, protecting both the clients and the bank.

Multi-Risk Home Insurance
Beyond Portuguese law, which requires properties in horizontal ownership to have fire insurance, banks require multi-risk insurance for mortgage financing. This insurance provides broader coverage, including protection against fire, natural disasters, civil liability, floods, electrical risks, and seismic events, among others.