Types of Housing Credit
Housing Credit for purchasing a house: this is the most common Housing Credit and is intended for those who need to apply for financing to buy a house. The banking institution can finance between 80% and 90% of the value of the property. This type of loan has several fees and taxes associated with it. You can opt for a Housing Credit with a fixed, mixed or variable rate;
Housing Credit with works: Buying a house in need of rehabilitation can be a good option because, in addition to being cheaper, it allows you to carry out the works to your liking. However, the issue becomes more complicated if you don't have money for remodeling. Banks have thought about this and some institutions already offer housing loan options with works included. In these cases, the property valuation process is different from that of a common credit. The house is evaluated according to its current state of conservation and an estimate of its value is made after completion of the works, according to the budget presented. Initially, financing for the acquisition is made and the amount for the works will be released in installments, depending on whether assessment inspections are carried out during the work;
Housing Credit for construction: This type of Housing Credit is intended for those who want to build their own house, whether they already have the land or not. Currently, several credit institutions offer products that include land acquisition and construction. In this situation, the credit will be made available in tranches (between three and six), as the work progresses. Throughout the process, inspections of the construction will be carried out by an expert from the bank, so that the installments will be released. A great advantage of this type of credit is that you can benefit from a capital grace period during which you will only pay interest. This period can vary between 24 and 36 months;
Housing credit for people with disabilities: There are housing loans for people with a degree of disability equal to or greater than 60% and who intend to build, buy, expand or carry out maintenance work on their home. These are called subsidized credits;
Housing Credit for rental and second homes: this type of Housing Credit is intended for those who want to purchase a property to obtain some income through renting it or to purchase a second home, such as, for example, a holiday home. In these cases there are some rules to comply with and the financing conditions will always be different from those applied to a first home, in terms of rates, for example;
Housing Credit for modular homes: this Housing Credit solution is recent. With the growing popularity of this type of construction, banks were forced to create financing adapted to these situations. Currently, there are already several banks that offer a type of Housing Credit intended for the purchase or construction – permanent or secondary – of this type of house;
Housing Credit for purchasing property from the bank: this loan is similar to Housing Credit as it is also intended for those who want to buy a house. However, as in this case the property belongs to the banking institution, special financing conditions are offered, and in many cases there may be financing of 100% of the value of the property;
Housing Credit for non-resident foreigners: Not all banks approve housing credit for non-residents. However, there are several that allow this, and as a general rule the conditions are more demanding and may be subject to some limitations: maximum amount financed; percentage of financing versus guarantee; maximum payment period. The reason for these differences lies in the fact that, in the event of non-payment, it is more difficult to take legal action. The same scenario applies in the case of Housing Credit for Portuguese residents abroad.
Housing credit with a guarantor: is it always necessary?
One of the obligations when applying for a home loan is to be able to assure the bank that you have the financial conditions to pay the loan. If, for some reason, the bank considers that there is a risk of default, it requests that there be a guarantor. The guarantor is a third person who acts as a guarantee for payment of the loan if the holder or holders are no longer able to do so.
However, this assessment of conditions varies from bank to bank and, if a guarantor is required at a particular banking institution, it does not mean that all of them will do so. Each bank has its own risk policy and criteria to define whether or not a process requires a guarantor to be approved.
If you don't have someone who can be your guarantor or if you prefer not to resort to this method, consult more than one bank and it is possible that you will be able to get your credit approved without resorting to a third person.
Amortize Housing Credit: new rules in 2023
The approval of the State Budget for 2023 brought some changes regarding the amortization of Housing Credit. Thus, in 2023 anyone who has savings or a PPR will be able to choose to use that money to repay the variable rate Housing Credit, without having to pay the early repayment commission that was, until now, foreseen.
Regarding the use of the total or partial balance of the PPR to pay off the debt on the home loan, here too you are exempt from penalties for having enjoyed the tax benefit associated with these savings plans.
These measures aim to offset the rise in interest rates that could lead to an increase in debt and non-compliance with obligations by many families.
Read the full report here.
Source: Imovirtual