There are often overlooked details that are crucial to getting a good deal. CNN Portugal heard from a specialist in the real estate market, a lawyer from the DECO financial office and a person responsible for the housing loan area and explains what you can not fail to do when you want to acquire a property
Despite the war, the rise in interest rates and the forecasts of the Bank of Portugal, the real estate market continues to rise. It is only during the first three months of the year that real estate prices in the country increased by 12.9%. Considering the investment, who wants to buy a housewarn the experts, it is necessary to pay attention to the details which can be decisive to make a good deal.
CNN Portugal spoke with Real Estate Market Specialist Massimo Forte, Elisabete Policarpo, Lawyer at Deco’s Financial Protection Office and João Melo, Real Estate Credit Area Manager at ComparaJá, who explain the mistakes to avoid, the details to know . and the steps you can’t skip.
Make an unrealistic assessment
When buying a house, there is a first step that must be taken safely, warns lawyer Deco Elisabete Policarpo: identify the weight that the purchase will have on the family budget. First of all, he specifies, whoever wishes to acquire a property cannot “forget that the housing loan is long-term and will accompany you at the 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, indicates the specialist. “The type of existing income, whether fixed or variable, the responsibilities already contracted, the evaluation of the rate of effort, the need for liquidity to respect the initial value, the signal (which must be assumed by the consumer to formalization of the promise to purchase and sell) are not always duly taken into account by the buyer”, he warns.
On the other hand, it is important to understand the interest rates of banks and to identify the reference values that you can pay to look for accommodation. However, underlines Deco’s lawyer, “it is important to consider that the value of the financing will depend on the value of the real estate expertise carried out by the banking establishment”.
Ignore certain expenses
The truth is that in addition to the monthly mortgage payment (and including the value of life insurance and property and casualty insurance), there are many other significant costs associated with buying a property. The real estate market specialist Massimo Forte reminds us that we must take into account the costs of registrations, deeds, bank evaluation and process as well as the Municipal Tax on Onerous Transfers (IMT), a compulsory expense when buying a house.
You don’t have money for entry
“Since 2018, no banking institution has been able to finance more than 90% of the value of the act of acquisition or expertise of the property”, notes lawyer Deco Elisabete Policarpo, explaining that this implies that anyone who wants to buy a house has to verify that they own it, for example, sufficient amounts for the so-called “down payment”.
In addition, he specifies, by not financing 100% of the appraisal value of the property, the consumer will obtain, at most, 90% of the value of the deed of acquisition (or appraisal of the property), which means that the acquirers must dispose of the difference.
Forget the effort rate
Any purchase involves an analysis of the family budget, but in the case of real estate it is essential to always take into account what is called the Rate of Effort. That is to say the ratio between the net monthly income of a household and its expenses.
In the case of a bank loan, this rate must be calculated according to household income and the installments that must be paid to the bank. Deco’s lawyer tells you the simple calculations that must be made to determine this value: the rate of effort = [total de prestações / rendimento do agregado familiar] x100). “The effort rate should be less than 35%,” warns Elisabete Policarpo.
Valuing the spread more than the APR
Knowing how to analyze the different indicators can be decisive in the amount to be paid when applying for a loan from the bank. According to João Melo, head of the housing credit sector of the 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 client, in order to cover the expenses it has had and generate profits with the credit – but also at TAEG. “It’s a big percentage in credit proposals,” he says.
Explaining 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”, João Melo guarantees that it is the APR value that “translates if we are faced with a good or bad proposition”. Therefore, it is good to have no doubt that “one of the most common mistakes is to ignore the APR in favor of the spread, because it is a more known term and with greater disclosure by the banks”.
Not assessing the condition of the house in detail
Another of the most common mistakes to avoid is not going to the site to see the condition of the property. Massimo Forte, specialist in the real estate market, guarantees that it is essential to “visit the property in person”, to avoid unpleasant surprises. And he even leaves a suggestion: during one of the visits, be accompanied by a construction professional, an engineer or an architect to understand details that escape most people.
On the other hand, this appraisal can help you to have a true assessment of the condition of the property and to understand the costs that may be involved. At the same time, certain elements resulting from the condition of the asset can be used to make the negotiation more profitable.
Devalue the area of the property
When you want to buy a house, 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 through the streets of the area where it is located. “You should always walk around the neighborhood, talk to neighbors,” he suggests.
Another tip is to visit the area and the property at different times, as 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 the noise.
have missing documents
If you are sure that you have found “the house”, it is urgent to request all the documentation of the property. According to the experts, there are documents that we sometimes forget to ask for, but which are essential for the company: the cadastre, the certificate of civil status and the license of use. Subsequently, it is also advisable to check that everything is within legal standards with a professional.
One of the most important documents, notes Massimo Forte, is the promise to purchase and sell (PCCV). This document is mandatory and will serve to guarantee your position and that of the owner on the values, deadlines and other conditions related to the purchase of the property.
Do little research and have little information
“Not doing a market study on the conditions applied by the various institutions to housing loans is a big mistake”, defends the decoration specialist Elisabete Policarpo. This step can make all the difference in the conditions that will be contracted, such as the value of the monthly payment.
The expert adds that the consumer, as a rule, contracts the mortgage with the institution with which he already has a business relationship, which is false. “Your bank will not always be the establishment which presents the most attractive conditions, sometimes it is even the one which presents the worst conditions”, he warns, explaining the importance of carrying out several simulations in different establishments and of analyzing carefully the proposed conditions.
Compare offers with those of your friends
Each case is different. This is the premise that João Melo says many people forget when buying a house. “Banking proposals are specific to each customer. A very common mistake is to compare the offers obtained with those of friends who have made a recent loan”.
According to the manager of the housing loan sector at ComparaJá, in addition to the profile, there are other factors that influence the amount the bank is willing to lend. “In addition to the characteristics of the customers (age, salary, charges, charges and household), there are other factors such as the type of employment contract, the existence or not of a second holder or guarantors, and what are the characteristics of the property to be acquired”.