Source: Freepik Author: Redaction Youth housing credit is a funding support provided by financial institutions to help young people aged 18-35 to buy a home. It is a very simple concept to understand, because it is a mortgage similar to traditional with small differences and special conditions, which can mean benefits for young people who want to take the step of buying a house. Moving forward with the purchase of a property today can mean huge charges that not all portfolios can handle, which is why there is a specific modality for the younger ones. How does youth housing credit work? It is important to keep in mind that if you are planning to proceed with a young housing loan application, take into account that there are criteria that you must meet to be eligible for this loan, namely the following. Initial input To begin with, before proceeding with an application with the bank, you should evaluate your available capital, because the higher the amount you are willing to give for the entrance to the house, the greater the probability of being assigned a financing. To get an approval, you must have up to 10% of the total sale value of the property, however, it is advisable that if you can and have this value, pay more to increase credit security. Effort rate Your effort rate can’t be high. This means that your home loan can not exceed 40% of the income you earn every month, keeping a balance of your accounts and monthly budget. This is a calculation that the bank will do for you, assessing your financial capacity to be able to ensure the payment of the credit installments. Safe work This factor has an influence on your financial stability, because with a safe job and a stable and regularized professional situation, you will have a better chance of seeing your credit application be approved. If you are effective is a point in favor, getting more confidence from the financial institution. Financial conditions In addition to a stable job, you must gather stable financial conditions, demonstrating that you do not have many charges to your responsibility, or that those you have are compatible with your request for funding. Guarantor A guarantor will intervene on your behalf, assuming the payment of the instalments, if you do not fulfill this obligation, and some banks exist this figure in order to ensure that the debt will be paid. Mixed, variable or fixed rate? How to choose Once you ask for your home loan and all eligibility criteria are assessed, you will be asked to select the type of rate you want for your loan. There are three: the mixed rate, the variable rate and the fixed rate. Mixed rate This rate works in two ways, and in the initial period of your credit, which may be 5, 10 or 15 years, you will have the fixed rate in force, and then the variable rate will be applied. It is then a type of tax that is intended, at an early stage, to help the borrower to organize himself financially during the early years. Variable rate The variable rate is calculated by the sum of the spread and the Euribor index, which will vary over the credit period. Therefore, the variable rate will be paid as the principal interest rates (Euribor) rise or fall, never knowing exactly what amount will pay in the future, as it is variable depending on the Euribor. Fixed Rate This is the safest rate for those who want to always pay the same amount of the instalment, being a rate that remains the same throughout the term of the loan. It usually has a higher value than the variable rate, however, it offers more security to the borrower, who will always know exactly when money has to be available to ensure the payment of the benefit. Concepts to retain Euribor (European Interbank Offered Rate): this is the Euribor interest rate, resulting from the average interest rates applied in the main banks and credit institutions of the euro area in the interbank market. It is the benchmark of the European market. Loan-to-value (LTV): this is the ratio that corresponds to the percentage that the bank can request in relation to the value of the property. Thus, a percentage that determines the value that the bank can lend, against the value of the property, and since no bank lends the entire value of the house, the LTV will vary according to whether it is a loan of greater or lesser risk to the financial institution. Effort rate: this is the rate that will represent the percentage of the total income of the borrower (or couple) that will be used to pay the credit. Thus, it helps to understand what is the available value of the income earned, to meet the expenses after the payment of benefits. Total amount charged to the consumer (MTIC): this acronym is what will let you know how much will cost you, exactly, the mortgage credit, corresponding to the total that you will have to pay for the credit by adding the amount of the loan with the costs of commissions, interest and taxes. Global Effective Anal Rate (APR): this is the rate that represents the entire credit charges, namely bank fees, registrations, taxes, among many others. Spread: this is the interest rate that is applied to credit agreements by the bank and represents its profit margin. What documents do you need to apply for a youth housing loan? • Citizen’s Card; • Receipts from the previous three months (or the most recent ones); • Statement of proof of the entity where you work; • Bank statement for the past few months; • Declaration of IRS. Guarantor: what you need to take into account Most likely you will be asked to elect someone as your guarantor, being this person committed to take responsibility for the payment of the debt if you incur in default of the credit agreement. Thus, your guarantor will be the bank guarantee for your credit, and may be required by the bank in the following situations: • if there is a risk of default; • if the stress rate is high; • When there is irregular credit history; • If you have an unstable financial situation. If the bank finds that your financial situation is stable, compliant and balanced, you can get a credit without needing a guarantor. However, you should always seek to obtain more than one credit simulation, from various banks and financial institutions , to understand which compensates the credit, and the values and rates may vary. We hope to have helped you and we are waiting for you in supercasa.pt to start the search for your future home!
Source: SUPERCASA Author: Redaction The Portuguese coastline is one of the richest geographical areas in Europe. Considered as the gateway to this continent, the coastline of our country offers a diverse and charismatic panoply of iconic locations, beaches that do not end and access to the great urban and cosmopolitan Portuguese centers. It is in the coastal strip that you find the best professional opportunities and the largest number of people of all ages, who maintain their proximity to the coast and to the rich Portuguese maritime heritage . You will find one of the most beautiful landscapes in Portugal, as well as a variety of extremely diverse species of fauna and flora, and a differentiating quality of life. If you are looking for a home and are committed to finding the perfect property for you and your family , SUPERCASA is the right property portal to find it! See the 8 options we have selected for you. House T3 in Argela, Viana do Castelo - 250.000€ Semi-detached house T3 + 1 in Lagoa, Algarve - 339.000€ House 3 Bedrooms in Peniche, Leiria - 389.000€ 2+1 bedroom apartment in Loulé, Algarve - 399.000€ Apartment T2 Duplex in Portimão, Algarve - 410.000€ 3 bedroom apartment in Nazaré, Leiria - 425.000€ House T3 Duplex in Caldas da Rainha, Leiria - 515.000€ House T2 Duplex in Vila do Bispo e Raposeira, Algarve - 595.000€ And if you liked these suggestions, you may also like the following: Looking for a house with terrace? 6 suggestions from SUPERCASA , Live 10 minutes from the beach? Realize this dream with SUPERCASA or Living by the sea: turn this dream into reality
Source: Freepik Author: Redaction A avalista is different from a fiador , although they can be confused by having a similar role . However, if there is a difference between guarantee and bail, the two nomenclatures take separate functions, representing two types of guarantee when granting a claim. Find out the differences so, if you are asked to be the avalista or fiador in a credit claim situation, know exactly what to do, knowing obligations, duties and everything that involves these two concepts. Fiador: what is it, what are your obligations and what risks are you taking? Fiador is probably the term you are most familiar with, and you may even know someone who is, or was, someone else’s guarantor in a lending situation. A fiador is nothing less than the person to whom the obligation to settle unpaid amounts falls if the person who took the credit, that is, the debtor, does not pay it. So, imagine: you have a family member who asked for credit to buy a house, and asks you to be your guarantor. By assuming this role, if your family member fails to pay the installments of the credit, you are responsible and responsible for ensuring these missing payments. We give the example of a family member, because in these situations, the most common is that the guarantors are the direct relatives of the credit borrower, such as parents, siblings or uncles. Thus, the greatest risk a fiador runs is even if the person of which he becomes a guarantor ceases to pay his obligations to the bank, which, in a more complicated situation, may involve the enforcement of his personal property by the creditor , as it assumes responsibility on behalf of the debtor. To mitigate these risks, the fiador can obtain the benefit of the prior exclusion, which allows him not to have to pay the debt until the credit holder’s assets are executed. And know that, when you become a fiador of someone, you will hardly stop being one if you change your mind in the future . A bail only ends after the full settlement of the debt or through an agreement with the creditor , however, and because it is a guarantee on debt compliance, this type of negotiations are difficult. Avalista: differences from fiador, obligations and risks Like the fiador, the avalista will be someone who takes responsibility for the payment of the debt in case of default by the credit holder, through letters or notes. Unlike the fiador, who pays the debtor’s default bond , the avalista pays the guarantee, which is used most often in the financing of legal persons, such as companies and organizations. The guarantee can be achieved by the total value of the debt or a lower one , and a signature on the back of the document is enough to seal the commitment. The figure of the avalista is more relevant for companies , unlike the fiador who acts as guarantor of an individual person. The endorsement thus contributes to the growth of small and medium-sized enterprises , often representing the only way for them to obtain financing from banks. Thus, a avalista is jointly and severally liable, in which both the debtor and the avalista assume the same responsibility in the claim , and the creditor entity may trigger the assets of any of the figures in case of default. It is common for the avalistas to be the partners or administrators of the companies for which the financing is requested from the creditor entities, doing so to facilitate the obtaining of this loan. As with bail, in the event of non-compliance, the avalista’s personal property may be at risk of execution. However, if the avalista presents a vulnerable economic situation, he may request a special procedure for settlement in the payment, with the creditor, based on a payment plan to facilitate and allow the guarantor the commitment made in the payment of outstanding amounts. In the last case, failing to secure the payments, the avalista may request a personal insolvency application with exoneration of the remaining liabilities , that is, request the forgiveness of the debt. If you are clear and would like to learn more about what a credit involves, we suggest you read Building credit: what is it and how does it work? , Credit intermediaries: how do they work? or Cancelling the mortgage: all you need to know
Source: Freepik Author: Redaction Having your own home can be achieved through, for example, the purchase of a property already built, ready to live, or a land where you can proceed to the construction of your dream home , through a project and license. This second option is increasingly adopted by families, who find in it a more economical and personalized solution, and can be cheaper than buying a new property. Still, as with the traditional purchase of a property, building a house from scratch can involve a large investment that requires some financing from the bank. What is building credit? Construction credit is a banking modality granted for the financing of expenses with works, constructions and interventions in real estate, allowing the borrower to take greater liberties with regard to the size of the property, typology, finishes and other features involving costs. Before, housing credit was only granted to those who had already bought a land with viability for construction , and the bank loan did not cover the purchase of the same, however, currently there are already several banks that facilitate the process, offering credit both for the acquisition of the land and for the respective construction works. Thus, very similar to housing loans, being a variant of this type of financing, construction credit focuses specifically on construction/construction costs. Main features To begin with, it is necessary to consider that the amount of this loan is established on the basis of the assessment of the architectural project and its project specifications , as well as the construction budget, calculation of the implicit expenses to determine the amount necessary for financing . Once approved, this credit is paid by the bank in tranches - or installments - being delivered as construction is carried out. At this stage, site surveys are carried out by experts from the bank or financial institution to ensure that everything is going as planned , and the land on which the construction is being carried out is given as collateral to the bank. Another important thing to retain is that this loan has a grace period of capital that can range from 24 to 36 months , implying the payment of interest during this period. This allows financial relief in the early stages of the process. What should you pay attention to when applying for this type of credit? If you submit an application for construction credit, you should take into account that you will not be given the full amount requested, as in housing credits. Therefore, before proceeding, consider that, usually, the maximum amount of this credit corresponds to 90% of the total value of the construction, which is determined through the initial evaluation of the land, the specifications, architectural design and budget presented. Then there are banks and financial institutions that can present you the money only after the construction has started, implying that you are the one to bear the charges at the beginning, with equity, until the delivery of the first tranche of the payment. And finally, if you choose a credit for the purchase of land, then to build a house there, the total amount borrowed by the bank may be higher, as it is allocated separately through a percentage corresponding to the land and another for the construction. It is important to note that each situation is specific and the allocation of amounts may vary from bank to bank and from case to case , and may, in situations such as applying for a loan for the construction of the property, have to be the owner to advance with 10% of their equity, with the bank to finance the rest. Important points: • To obtain a housing loan it is imperative that the land where you want to build (if you are the owner or are going to buy one) has feasibility of construction; • If you apply for credit without having the construction project, it is advisable to deal with the City Council before approving the construction of the land; • Calculate your expenses to know exactly how much money you will need for interventions , including architectural projects, license applications and project execution. Are you clear about these procedures? Read also Preventive maintenance: understand the importance of this concept , Are you going to remodel the house? Know the associated expenses and Will buy a house in plan? Advantages and disadvantages
Source: Freepik Author: Redaction After two years of strong constriction in demand for housing loans, banking anticipates a resumption of this demand already from the second quarter of the year. Households stopped asking for housing loans mainly because of rising interest rates, which put pressure on family budgets and led to a contraction in demand for financing. Now, for the first time since the second quarter of 2022, Banco de Portugal’s diffusion index about banks expectations for the demand for credit for house purchase has returned to a positive value , which means that the sector anticipates demand from households loans , and is expected to grow after the fall of the last two years. The outlook is accompanied by a forecast on the relief of reference interest , in which the European Central Bank has already admitted to tinkering since the summer. This decrease represents a drop in market rates, namely Euribor, used in the home loan calculation. Banks thus point to a slight increase in demand for residential credit in the second quarter of 2024, as the survey on the credit market shared by Banco de Portugal found on Tuesday. On the demand recorded in the first quarter, there was a slight decrease in housing and consumption segments , due to the high level of interest rates, as well as the fragile confidence of households. Keep abreast: New housing credits: only 3% of the poorest families had access
Source: Freepik Author: Redaction The study Portrait of the Portuguese Youth Population. Who They Are, What They/Move Now and What Their Expectations Are shows a worrying reality for young Portuguese, who have more and more difficulty in leaving their parents home or receiving salaries in accordance with their academic qualification. The study, coordinated by Alexandra Serra from the University Institute of Health Sciences, and by Rui Serôdio, from the University of Porto, had a sample of 5137 young people, between 12 and 30 years old. According to the analysis, 65.6% of young Portuguese receive less than 1,000 euros per month and work, on average, 36 hours per week. On the other hand, the average salary is set at 724 euros for young people who work up to 35 hours a week, while for those who work between 35 and 40 hours, the salary is 847 euros. Young people working over 40 hours a week are paid an average of EUR 1144, but data shows that a gender gap, with men receiving 26% more than women, is where the incomes are highest. As for housing, the study indicates that only 20% of young Portuguese have their own home, contrasting with the 34% who live with their parents or other relatives and the 35% who rent. On the other hand, 10% live in rented rooms, paying on average 270 euros per month, while 12% spend a value above 700 euros per month. The share of young people who dream of one day being the owner of their home is 77.5% , hoping to achieve this goal by the age of 29, although the expectation increases to 33 years for those over 25 years. Also follow: Less and less young people are homeowners
Source: SUPERCASA Author: Redaction Warm days are at the door, calling for late nights on the street. Preferably, in pleasant and comfortable outdoor spaces such as a garden and terrace and, at a jump from summer, these become the dream of many owners . When it comes to outdoor activities at home , the terraces are ideal for those who have children or animals, advantageous for their low maintenance. If you are thinking of buying a house , it is important to consider that when choosing one with this type of outdoor spaces, you will live with a higher quality of life, as you will have just around the corner a refuge space and in which you can enjoy the hot days, and can even customizeand decorate it to make it even more appetizing and comfortable. Discover the selection of properties for sale at SUPERCASA with these features and dream of long sunbathing in the comfort of your home! Apartment T4 in Barreiro and Lavradio, Setúbal - 589.000€ House T3 in Valado dos Frades, Nazaré - 590.000€ House T3 Triplex in Celorico de Basto, Braga - 600.000€ House 3 Bedrooms Duplex in Mafra, Lisbon - 685.000€ House T4 + 1 Triplex in Nogueiró e Tenões, Braga - 750.000€ House 4 Bedrooms in Cascais and Estoril, Lisbon - 949.000€ Discover also Buy a land to build: everything you need to know or Póvoa de Varzim: travel to this Portuguese land
Source: Freepik Author: Redaction Resorting to a credit intermediary is more common when buying a house, if there is a need for financing to cover the amount ordered in the sale. In this situation, you will be taking out a consumer credit to buy a property. However, it may apply not only to the real estate market, but also to the purchase, for example, of a car or appliance, and credit intermediaries operate in various market segments. If you don’t know what it is, how it works or what kind of professionals can guarantee it, this is the right article to read. What is a credit intermediary? As its name implies, credit intermediaries mediate between consumer and credit institutions , that is, between the person requesting the loan and the banks. It is essential to understand that under no circumstances are credit intermediaries who grant the loan. The credit intermediary will be the bridge between themselves, the consumer who needs the credit, and the banking institution , presenting proposals, advice and support. Thus, if you need a credit, you can use these entities to help you in the process with the bank , mediating the process and guiding you through the best possible option. Which entities can be credit intermediaries? To carry out this activity, entities are required to comply with certain requirements and to receive the authorization of Banco de Portugal (BdP), in order to ensure not only the fulfillment of consumers rights, as well as the legal duties to be able to carry out activity. A credit intermediary may be a natural person or company, provided that it has the authorization of Banco de Portugal to submit and propose credit agreements. And you can: • Provide support in the preparation of contracts; • conclude contracts on behalf of banks, provided that they are duly contracted by banks; • Provide expert advice services. Thus, a credit intermediary functions as an entity aggregating information , and may submit to it one or more credit proposals, one or more banking institutions qualified for this provision of services, as well as contractual services. In addition, one of its responsibilities is to provide advice and support in the various stages of contracting. What are the stages of contracting a credit? It is important to be aware of the step by step associated with the contracting of a credit, especially if you are using the help of a credit intermediary. 1. Submission of tenders and contracts At this early stage, the credit intermediary must contextualise it about all the possibilities of the consumer by presenting to it available credit products offered by the credit institutions authorised to grant loans. It is important that the credit intermediary provides complete, clear and easy-to-understand information to the consumer, delivering personalized pre-contractual information and being available to answer any questions that may arise. 2. Consumer support in the preparation of contracts If the credit intermediary decides to proceed with the contracting of a loan, it must gather all the necessary documentation for the procedures and deal with the associated bureaucratic issues, while clarifying the potential doubts that arise. This is a service that can be provided by credit intermediaries regardless of whether or not they have proposed or presented the contract with which the consumer will proceed. 3. Conclusion of contracts and provision of advice In this third stage, credit intermediaries are responsible for concluding contracts on behalf of credit institutions. In addition to this authorization, they should advise and recommend possible changes or corrections to contracts, alerting consumers to any situation. What types of credit intermediaries exist? Divided into three categories, although they can only operate in one, there are tied credit intermediaries , ancillary credit intermediaries and unbound credit intermediaries. Linked credit intermediaries These can work with several credit institutions, but only if they represent the majority of the market, acting on behalf of and under the full responsibility of these institutions. In this type of intermediation, where there is a contract between the credit intermediary and the institution, t he intermediary cannot charge the consumer charges, and his remuneration is paid by the banking institutions with which he works. Credit intermediaries in an ancillary capacity These intermediaries provide goods and services, with the objective of selling the respective goods or providing the respective services. It could be, for example, the intermediary of an appliance store or car dealership. In this type of intermediary, a different rule is applied: you can work with several credit institutions as long as they do not represent the majority of the market. Unbound credit intermediaries These intermediaries are not linked to any institution, so the intermediation contracts are concluded directly with the consumer. That is, it can establish its own conditions for the provision of services. In the contract, the value of the commission to be allocated to credit intermediation must be made explicit, and they are the only ones that can be designated as independent. Who is authorized to practice credit intermediation? As we explained above, the authorization of Banco de Portugal is necessary for the exercise of the credit intermediation activity , so those authorized to the activity are included in the lists published by the bank, which you can consult on the official website of the institution. Therefore, before using a service of this kind, consult the lists and make sure that the person or company you want to use is authorized to provide the service. There are several real estate agents authorized to this activity, which can help you in the process of not only buying a house, but also applying for credit from banks, presenting you the best proposals and offers. Explore all the real estate companies that advertise in SUPERCASA, here
Source: Freepik Author: Redaction The poorest families are finding it increasingly difficult to access new loans for house purchase and last year , as shown in a report by the Banco de Portugal (BdP), only 3% achieved this concession. Looking at the third quarter of 2018, the percentage of credit granted to high risk borrowers was 32%, having sunk in 2022 and 2023 to only 3%, This is an effect of the macroprudential recommendations for reducing the risks of the financial system, which came into force in September 2018 and continued to be met in 2023 , even though some indicators had shown improvement. Thus, with strict rules for granting credit, more vulnerable households are becoming dependent on the rental market, where rents are increasingly higher, in addition to the fact that interest rates have increased, leaving these aggregates without the possibility and ability to acquire their own housing. In September last year, contrary to the restrictive recommendations, Banco de Portugal relieved one of the brakes, deciding to reduce the stress rate to reduce the interest rate for the purposes of calculating the stress rate. Read also: Inflation in Portugal rose 2.3% in March, above the EU average , Bank profits in Portugal skyrocket to 5.6 billion and Profile of new residential credit customers improved in 2023
Source: Freepik Author: Redaction The Council of the Government of the Azores considers that Euribor rates may continue to have an impact on housing loans, and has therefore approved the extension of CREDITHAB, transitional financial support for the payment of instalments. It will remain in force until 31 December 2024. As the organisation explained, it can currently be seen that, since the peak of reference interest rates, reached in October 2023, their trajectory has been decreasing, having already fallen back to the values practised in June last year, and it is foreseeable that they will continue to fall throughout the current year . Even so, it is expected that during the year 2024 the differential in interest rates on home loans, compared to the historical average of Euribor rates, will continue to be significant, which is why the extension of the support until 31 December 2024 is justified , explains the Azorean executive. The maximum limit of financial support to be granted this year was also set at 5,380,000.00 , in programme contracts for the allocation of financial contributions to initiatives based on annual and multi-annual programmes of interest to the development of tourism in the Azores. Read more: Azores wants to provide 2,000 homes by 2034 , Foreigners make up 11 per cent of housing loans granted in 2023
Source: SUPERCASA Author: Redaction Buying land to build on can be an alternative to buying a house, traditionally already built and ready to move into. In this situation, youll have to realise that its a lengthy process and involves some bureaucratic procedures, but that in the end, once its done, its advantageous and even more economical. From the conception of the project to the execution of the work, building a house can be the most viable option for those who want a tailor-made house within the limits of their available budget , and the first step to achieving this is to buy a plot of land on which to build a house. In this step, you need to take into account aspects such as the feasibility of building and the characteristics of the land. First of all, you need to check whether it is possible to build on the land you are interested in and whether it is located in an Urban Area of Illegal Genesis. If its on an allotment site, you should consult the most recent allotment licence, check that everything is in order and pay attention to the characteristics of the land, namely whether its sloping or uphill. Its best to look for flat land , as other types will always involve more costs. Key points to look at before going ahead with the purchase Check the lands documentation and consult the Municipal Master Plan to validate its plans and regulations; Pay attention to the morphological characteristics of the land - check for water tables, check the characteristics of the soil and check the slopes of the land; Confirm whether or not the land is part of a subdivision (you can consult the latest version of the licence and the detailed plans); Check whether or not there is already an approved project; Analyse the location , solar orientation , whether there are any derogatory factors around the land or whether it will not serve as a passageway for others. Approved projects vs. unapproved projects It is essential that you analyse all the variants explained above, as you will obtain crucial information on whether or not you can go ahead with the construction of your property. In this case, one of the most important is to understand whether or not the land is part of a subdivision . If it isnt, it means there wont be an approved project, which means youll have to submit a licensing project to the town hall and, at a later stage, apply for a building licence. Once these documents are in place, you must apply for a housing licence for the property so that you can live in it. In the case of land without approved projects, you have to fulfil all the stipulated requirements in order to get the licence and, until the construction phase, it will take time and patience, depending on the pace of work of the town hall where your land is located. On the other hand, if you buy land with an approved project, it will most likely already have an authorised licensing project and a building permit ready to go. However, you should be aware that if you buy a plot of land with an approved project, the property has to be built exactly as it is designed in the project, so if you want any changes or rectifications, you may not be authorised to make them. What documents do I need to buy a plot of land? Habitation licence, if applicable; Building licence, if applicable; Licensing project, if part of a subdivision; Municipal Masterplan; Land registry; Land registry certificate; Municipal Fees Regulations for urban development activities and operations related to the municipality. If you have these documents together, youll have more security when you go ahead with the purchase of the land , as they are documents that can be requested at a later stage. What taxes will you pay? Although its a cheaper option, theres no escaping the taxes involved in buying a property. In the case of a plot of land, these are as follows: Municipal building taxes; Urbanisation fees and urbanisation compensation fees; Municipal transfer tax (IMT); Municipal Property Tax (IMI); Additional IMI (AIMI). Are you ready to move forward? Check out the unmissable opportunities available for sale at SUPERCASA! Land in Torres Vedras, 85.000€ Land in Alcobaça, Leiria, 110.000€ Plot in Vila Nova de Gaia, Porto, 125.000€ Building plot in Portimão, Algarve, 179.000€
Source: Freepik Author: Redaction Buying a house at auction can involve a series of precautions that well alert you to in this article, explaining exactly what this type of business consists of. Were talking about houses that have been put up for sale following foreclosure proceedings against the state, banks or other organisations. Often, these are properties that, due to non-payment, have been taken from their owners or handed over to organisations to sell in order to pay off debts, which involves a series of legal processes. Which organisations use auctions for seized houses? Banks or financial institutions Youll find houses in this situation mainly on the websites of banks and other financial institutions , since they are the ones who take ownership of the property in cases where the owner defaults on their mortgage payments. The property is the guarantee, and once the agreement stipulated in the loan has not been met , it is the bank that gets the house. In this situation, it puts it up for sale again, either by using the property market to sell it or by holding auctions. In this situation, banks can offer lower spreads and the total amount of the financing of the amount requested for the house , offering special conditions to facilitate the sale. Tax and Customs Authority Another organisation that can put houses up for auction is the Tax and Customs Authority (AT), in situations similar to those that occur with banks - by failing to pay the tax authorities, taxpayers can have their properties seized. In the case of the AT, there is either a closed letter proposal or private negotiations. Social Security Like the AT, when there are debts, this organisation has the power to seize property from debtors and sell it through public tenders. These are held annually. Order of Solicitors and Enforcement Agents (OSAE) The OSAE has developed the e-leilão website, where it sells houses that have been seized in enforcement proceedings. Town halls Council houses can be sold at public auction. What do auction sales involve? Depending on the situation, which will vary according to the entity holding the auction, the auction may be scheduled in advance, usually through specific media such as specialised websites or newspaper advertisements. Immediately prior to the auction, there will be a public display of the goods to be auctioned so that potential buyers can examine and evaluate them. It is at this point that interested participants are required to register in order to take part. To complete registration, they must provide their personal information and, in some cases, deposit a sum of money as a guarantee. If you dont buy any goods, this deposit will be returned to you and, on the other hand, if you complete the deal, this amount will be taken as part of the down payment on the property, in whole or in part. On the day of the auction, the items for sale are presented one at a time by the auctioneer, allowing potential buyers to bid a price. When the highest bid is reached, the auctioneer declares the item sold to the winning bidder. However, before all this, there are a few things to be aware of: See all the propertys characteristics Before going ahead with any purchase offers, make an assessment of the property you are interested in. With prior notice, request a visit to the house and speak to the real estate agent, as what is portrayed online does not always correspond to reality. Make sure youre making a good investment. Buying auction prices with market prices Despite the special conditions often offered at auction, this type of purchase may not pay off when comparing asking prices with market prices for properties with the same characteristics . Do your research and evaluate all the options. Ask for the propertys Certificate of Title Its important to realise that the property you want to invest in has no associated charges, especially in the case of an auction sale, where there are often associated liens and mortgages. So, to make sure youre buying a house free of encumbrances, you can go to the Land Registry Office and request the propertys Certificate of Title. This request can also be made online, but there is always an associated cost. Check if there are tenants in the property or if there are heirs who can claim it This is a measure that could save you headaches in the future. Make sure that there is no one who can claim the right to the house you want to buy , such as tenants or heirs to the property - or even the spouses of the owner of the seized house. If there are tenants living in the property for more than two years, they can exercise their right of first refusal and, in the case of heirs (spouses, children and parents), they can exercise their right of redemption to buy the house. How does bank financing work? If you end up buying a property at auction, you will have to sign a Promissory Purchase and Sale Agreement, thus formalising the transaction. However, if you need a mortgage to make the purchase, you should first ask for pre-approval of the loan before committing to any deal. Ideally, you should do this before even registering for the auction, regardless of whether or not you know the value of the property, in order to check that you meet all the conditions necessary for the loan to be granted. Buying a house at auction is a simpler process than it looks , requiring only a few standard procedures when it comes to participating in the auction itself . For the rest, it resembles a traditional buying process. If you have any doubts, we recommend you read the following articles : Donation in life or receiving an inheritance: tax implications , What is Usucaption?
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