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Home Entry: Tips for Saving Money

23 JUNI 2022
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Dicas Mercado Imobiliário Destaque Notícia Homepage Compra de Imóveis Comprar Casa em Portugal Crédito Habitação
When you want to buy a house, for many Portuguese it becomes difficult to get the sufficient amount of money for the down payment. So follow these tips to save this amount without superhuman efforts.
Home Entry: Tips for Saving Money
Currently, in order to take out a mortgage loan, it is required that you have at least 10% of the value of the property. So, know ways to save to be able to make the down payment on the house of your dreams without additional efforts.

After the 2008 crisis, with a strong focus on the real estate market and its respective financing, there was a successive implementation of measures to reduce the risk of this type of loans made by different banks. 

Thus, since 2018, Portugal has legislated to limit the "loan-to-value" (LTV) ratio, i.e. the percentage that lenders can finance in relation to the appraised value of your future property. 

In this sense, if you have, for example, a certain apartment which has an appraised value of 150.000 euros, the down payment that must be advanced will have, as a minimum, a value of 15.000 euros.

There are only two exceptions to this rule: 
  • Buying a property that has been subject to a lien by your bank, although 100% financing does not apply to all liens filed;
  • If you intend to build a house, the value of the land purchased, inherited, or donated may be used to cover the required down payment.

However, it should be noted that the vast majority of home loans are made with a down payment that will have to come from your own capital, and you cannot ask for an additional loan for this purpose. 

In this sense, follow some tips to save this amount without superhuman efforts.

#1. Analyze expenses in detail 
Before deciding what your sources of savings will be, it is important to have a thorough analysis of your most important monthly and annual expenses. 

Although this may seem like an exhaustive process, there is a principle that can help you, the Pareto Principle, also known as the 80/20 rule. This principle is widely used in the business world, is also verifiable in various natural phenomena and this principle states, in its most general writing, that 80% of the effects derive from 20% of the causes.

Applying this principle to family finances, you should focus on expenses of greater value and/or with greater recurrence. In this sense, car expenses, rent, credit cards, food, and other recurring payments such as gym memberships and the various streaming services you may subscribe to.

After this initial tabulation you should move on to the next step, which is to focus on your biggest potential sources of savings.

#2. Tips for cutting down on expenses
There are several approaches and strategies beyond the ones presented that you can select, such as:
  • Today, especially in larger cities, there are alternative transportation solutions that could mean big monthly savings on fuel;
  • Regarding food costs, you can plan your weekly meals according to the most interesting promotions for you;
  • Evaluate the use of all your subscription services and determine if they are really an expense that you actually enjoy;
  • If you have a monthly payment associated with a credit card and, for example, a car loan, consider doing a credit consolidation, substantially reducing your monthly payment due.

#3 In addition to saving, create new sources of income
On the one hand, it is important to watch and manage your spending, on the other hand, it is also essential to create new sources of income with the funds you save.

In this sense, you should evaluate the different possibilities to put your money to generate new income, such as joining a savings account or buying sovereign bonds. 

Never forget to analyze the risk of the financial products you subscribe to and buy from your bank, seeking extensive information about each one.
Themen
Dicas Mercado Imobiliário Destaque Notícia Homepage Compra de Imóveis Comprar Casa em Portugal Crédito Habitação
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