Real estate and consumer loans in Portugal: discover the new rules
New rules on mortgages and consumer loans in Portugal were introduced as of Sunday, 2 July. As an expatriate, it is sometimes difficult to know the different rules in norm of credits house or consumer especially when one does not speak the language. If you want to buy a house in Portugal read this: The Bank of Portugal has published new rules that apply to borrowers as well as banks and they change the way you can borrow. What is the maximum debt ratio accepted? What is the maximum percentage loaned by banks to buy a house in Portugal? What is the term limit of a home loan or consumer loan? Lisbob, the expatriate assistant in Portugal, tells you all about the new rules introduced by the Bank of Portugal on consumer loans and mortgages, so that buying a house in Portugal becomes a pleasure.
Limits of the household debt ratio accepted in Portugal
What is the maximum debt ratio accepted in Portugal? The Bank of Portugal is changing the rules of the game regarding the granting of new loans. It now limits these new loans only to clients who spend a maximum of half (50%) of their net income to repay the monthly payments of all loans held (housing and consumption).
However, the bank supervisor notes exceptions, in particular by allowing borrowers to exceed this debt limit by up to 5% of the total amount of credit each bank grants annually. Also, up to one fifth of the total amount of credit granted each year can have a rate of 60%.
Maximum financing of mortgage loans in Portugal
What is the percentage of the amount of real estate that banks can lend you? The Bank of Portugal recommends that the ratio between the loan amount and the value of the property pledged as collateral be limited to 90% for home and permanent residence loans. Clearly the money borrowed for the purchase of the house can be up to 90% of the value of the property given as collateral.
This ratio is calculated based on the lowest value between the purchase price of the house and the valuation value of the house. For loans for purposes other than real estate, the maximum loan is 80% of the value of the property.
Finally, in the case of loans for the acquisition of real estate held by the Portuguese banks themselves and for real estate finance leases, the total value (100%) of the property under guarantee can then be borrowed.
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Duration limits for loans in Portugal
What is the maximum duration for a mortgage or consumer loan? The Bank of Portugal recommends this time a maximum of 40 years as a limit on the duration of new mortgages and mortgages as well as mortgages backed by mortgages. It also calls for a gradual convergence of the loans granted by the banks to reach an objective of average maturity of 30 years and this for the end of 2022.
The new consumer loans for their part must now last for a maximum of 10 years in Portugal.