Details that are essential to getting a good deal are often overlooked. CNN Portugal heard a real estate market specialist, a lawyer from the DECO financial office and someone in charge of the housing credit district explain what you can’t fail to do when you want to acquire a property
Despite the war, the increase in interest rates and the expectations of the Bank of Portugal, the real estate market continues to rise. Only in the first three months of the year house prices in the country by 12.9%. In view of the investment, Who wants to buy a houseExperts warn, you should pay attention to the details that can be critical to striking a good deal.
CNN Portugal spoke with Massimo Forte, a specialist in the real estate market, Elisabeth Policarpo, a lawyer at the Financial Protection Bureau of Deco and Joao Mello, in charge of the housing credit district in ComparaJá, who explained the mistakes to avoid, and the details to be aware of. And the steps you can’t ignore.
Make an unrealistic assessment
When buying a home, there’s a first step to take safely, warns Deco attorney Elizabeth Policarpo: Determine the weight that the purchase will have on the family budget. First and foremost, he says, not everyone who wants a property “can forget that a housing loan is long-term and will accompany you through different stages of life.”
Therefore, one of the mistakes is not to make a realistic assessment from the start. For this, it is necessary to analyze several factors, the specialist indicates. “The type of current income, whether fixed or variable, the responsibilities already contracted, the effort rate rating, the need for liquidity to comply with the initial value, and the signal (which must be assumed by the consumer until the purchase is formalized) that the promissory sale and purchase agreement is not always considered.”
On the other hand, it is important to understand the interest rates of banks and determine the standard of values that you can pay to search for a home. However, Deco’s attorney asserts, “It is important to consider that the value of the financing will depend on the value of the property appraisal carried out by the banking institution.”
Ignore some expenses
The truth is that in addition to your monthly mortgage payments (including the value of life and multi-risk insurance), there are many other significant costs associated with purchasing a property. Real estate market specialist Massimo Forte remembers that the costs of registrations, bonds, bank appraisals and operations as well as the municipal tax on burdensome property transfers (IMT), a mandatory expense when buying a home, must be taken into account.
You don’t have the money to enter
“Since 2018, no banking institution has been able to fund more than 90% of the value of the takeover deed or appraisal of the property,” notes Elisabeth Policarpo, Deco’s attorney, explaining that this means that anyone who wants to buy a home has to verify that they own it, on the Example, sufficient amounts for the so-called “down payment”.
Furthermore, he says, by not financing 100% of the property’s appraisal value, the consumer will get, at most, 90% of the value of the purchase bond (or property appraisal), which means buyers should have the difference.
Forget the voltage rate
Any purchase includes an analysis of the family budget, but in the case of real estate it is always necessary to take into account the so-called effort rate. That is, the relationship between a household’s net monthly income and its expenditures.
In the case of a bank loan, this rate should be calculated on the basis of the family income and the installments to be paid to the bank. Deco’s lawyer points out the simple calculations you must do to determine this value: Voltage rating = [total de prestações / rendimento do agregado familiar] x 100). “Effort rate should be less than 35%,” warns Elizabeth Polycarpo.
Spread value is more than APR
Knowing how to analyze various indicators can be decisive in how much to pay when applying for a loan from the bank. According to Joao Melo, in charge of the housing credit district in Compare now, a company that simulates bank credit, it is important to pay attention not only to the spread – the rate that the bank charges the customer, in order to cover the expenses that he had and to make a profit on the credit – but also to the annual interest rate. “It’s an important percentage in credit offerings,” he says.
João Melo explains that the APR “includes not only the value of the spread, but also all the costs inherent in the loan such as life and multi-risk insurance”, ensuring that it is the value of the APR that “translates whether we are facing a good or a bad proposition”. Therefore, it is good not to suspect that “one of the most common mistakes is to ignore the APR in favor of the point differential, as it is a term better known and with greater disclosure by banks.”
Not assessing the condition of the house in detail
One of the most common mistakes to avoid is not to go to the site to find out the condition of the property. Massimo Forte, a specialist in the real estate market, ensures that it is necessary to “visit the property in person”, to avoid surprises. He even leaves a suggestion: On a visit, he should be accompanied by a civil construction professional, engineer or architect to understand details that most people overlook.
On the other hand, this appraisal can help you get a true assessment of the property’s condition and understand the costs that may be involved. At the same time, some elements resulting from the condition of the property can be used to make the negotiation more beneficial.
Decrease the value of the real estate space
When you want to buy a home, it is important to know the area in which you are located. Therefore, Massimo Forte advises, in addition to visiting the interior of the property, to walk the streets of the area in which it is located. “Always walk around the area and talk to the neighbors,” he suggests.
Another tip is to visit the area and property at different times, because there are details that are only discovered during the day – such as the need for repairs – and others that are more noticeable at night – such as noise.
They have lost documents
If you are sure that you have found the “house”, then it is urgent to order all the documents for the property. According to experts, there are documents that people sometimes forget to ask for, but they are necessary for work: the cadastre, the certificate from the registry office, the license to use. After that, it is also advisable to check that everything is within legal norms with a professional.
Massimo Forte notes that one of the most important documents is the Promise to Buy and Sell (CPCV). This document is mandatory and will serve to ensure your position and the position of the landlord in relation to the values, deadlines and other terms related to the purchase of the property.
Do a little research and you have a little information
Elisabeth Policarpo, a specialist in Deco, defends that “not doing a market survey of the terms that different institutions apply in housing credit is a big mistake.” This step can make a big difference in the terms that will be contracted, such as the value of the monthly installment.
The expert adds that the consumer, as a rule, contracts for a mortgage in the institution with which he already has a business relationship, and this is wrong. “Your bank will not always be the institution that offers the most attractive conditions, and sometimes it will be the one that offers the worst,” he warns, explaining the importance of running several simulations in different institutions and carefully analyzing the proposed conditions.
Compare offers with friends’ offers
Every case is different. This is the premise that Joao Mello says that many people forget when buying a home. “The bank’s proposals are specific to each client. A common mistake is to compare the offers obtained with the offers of friends who have taken out a recent loan.”
According to the person in charge of the ComparaJá housing credit area, in addition to the profile, there are other factors that affect how much a bank is willing to lend. “In addition to the characteristics of the clients (age, salary, expenses, wages, family), there are other factors such as the type of employment contract, the presence or absence of a second holder or guarantors, and what characteristics of the property to be acquired.”
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