Source: Adobe Stock Author: Redaction It is important to consent to informed actions, especially when these actions are reflected over a long period of time, as is the case with a loan . To help you in this process, we show you exactly what conditions you should evaluate when taking out a loan and can move forward with informed decisions. Analyze your situation Making an analysis of the real need to borrow is key, making sure you really need a loan and that the amount is appropriate for your purpose. Make an analysis of your net income and monthly expenses , remembering that the most advisable is not to commit more than 30% of your earnings on a loan, risk of non-payment of benefits. Make comparisons and find out about the general conditions Compare various loan proposals, in different banking institutions , evaluating the reliability of creditors and transparency of information provided. Penalties and fines should also be taken into account, in particular the conditions for late payment penalties or the application of amounts, if you decide to settle the loan before the deadline. With regard to fees, you should take into account that the nominal interest rate is the rate announced by the creditor, while the effective interest rate is the charge that gives you a global view, needing the full cost of the loan. Still within the associated costs, should also take into account the CET - Total Effective Cost - which is considered the best indicator of the real cost of the loan. You can also analyze the payment terms, keeping in mind that the longer the loan period, the smaller the amount of the instalments. On the other hand, the total cost also increases due to accrued interest. Check if the amortization system is Price, SAC - Constant Depreciation System -, or another, since this condition will have an impact on the interest paid and calculated over time. A lso check if a guarantor or guarantor will be needed, since there are some loans that require guarantees, more usually in the purchase of vehicles or real estate. To ensure you make the best choice, a careful and thorough analysis is essential. Make the right choice for you! Find out more about this topic: Credit intermediaries: how do they work? , What are the rights and duties of the Guarantor? and Credit Liability Map: what is it?
Source: Adobe Stock Author: Redaction In addition to choosing the house of your dreams, the decision on which interest rate to choose is one of the most important when taking out a mortgage , as it is something that will accompany you until the loan is paid off. Rates change according to the market and its financial indicators, so to help you understand the differences in the rates available, SUPERCASA Notícias will answer your questions. We are currently living in times when inflation in the Eurozone is out of control, and the major impact is on citizens, increasing the cost of living in general. With this in mind, the ECB (European Central Bank) has been studying the possibility of reducing interest rates, which are closely related to inflation , thus causing gradual relief and greater financial leeway for families. These changes fluctuate with the Euribor , which in turn is calculated daily and defines the average interest rate on interbank loans . The fixed interest rate If you opt for a fixed interest rate, you will always pay the same amount to the bank regardless of Euribor fluctuations. However, you should bear in mind that you may end up with a higher amount compared to the variable rate, due to the security of not having increased instalments. The rate to be applied depends on the bank, but is based on market values for the same term - this is called the swap rate. The advantages are therefore predictability and security, allowing for more precise financial planning since the monthly instalments will always be the same, and protecting you against unexpected interest rate rises , which can be crucial for families with tighter budgets. The cons, on the other hand, are cost, as the fixed interest rate is generally higher than the variable one due to the risk taken on by the bank, and inflexibility , as it prevents you from benefiting from potential drops in interest rates during the contract period. The mixed interest rate This is the rate that has been most sought after, as it has fixed interest at the start of the contract, followed by a variable rate . Those looking for greater stability prefer this rate as it is not subject to variations. It thus combines the characteristics of fixed and variable rates, dividing the contract period into two phases: in the first, the rate is fixed for a set period - for example, 5 or 10 years - while in the second phase the rate becomes variable, indexed to Euribor. This type of rate thus offers balance and savings potential, as you will have greater flexibility and benefits in relation to falling interest rates during the variable phase, but also in the first few years, during the fixed phase, when the impact of instalments on the budget is more critical. On the other hand, the mixed interest rate type gives less predictability, increasing the feeling of uncertainty, as the monthly instalment could go up after the fixed rate period if interest rates rise, making it difficult for you to plan your finances in the long term. The variable interest rate If you opt for the variable interest rate, you need to bear in mind that it depends on two factors: the spread and the 3 or 6 month Euribor rate. So if you opt for this version, you can expect to pay more if the Euribor rate rises. On the other hand, if it goes down, youll pay less. So the advantages lie in the cost and savings potential , while the disadvantages are intrinsically linked to the risk and unpredictability of interest rates, which can go up as well as down. Which is the best choice? Its important to bear in mind that each situation is unique and specific and should always be monitored by a financial institution, which will present you with the best conditions and options for your financial availability and profile. Nevertheless: - If you value security and predictability, a fixed rate may be the best option, even if it implies a slightly higher cost; - If youre looking for a balance between security and flexibility, a mixed rate may be a good alternative; - If you have a higher risk profile and are willing to take a risk in exchange for a potentially lower cost, the variable rate can be advantageous, as long as you are prepared to deal with the possibility of increased instalments. Remember that the choice of interest rate is a crucial decision with significant potential for your long-term finances. Investing time in analysing the different options and consulting a credit broker is key to making the right decision for you and your future. The criteria you should take into account before choosing are: - The stability of your income; - The term and amount of the bank loan; - The potential for career progression. If you found this article useful, then read: Three tips for dealing with rising instalments , What is a bank moratorium? Find out more , The 10 steps you need to take before going ahead with a house purchase or Home loans: what you should propose in a renegotiation
Source: Adobe Stock Author: Redaction Buying a home is one of the most important financial decisions that anyone can make, because it requires a great availability of capital, not only in the initial phase of the purchase, as over the years that it is owner. It is necessary that you prepare financially for the purchase of a property, and to help you, we give you some useful tips. First, assess your current financial situation. Make a detailed survey of your monthly income and expenses. It is important to know exactly how much money comes and goes every month to determine how much you can save for the home purchase. Create an emergency fund with at least six months of expenses to cover any unforeseen events that may arise during the purchase process. Next, consider the costs involved in buying a home beyond the sale price. Expenses such as fees associated with bureaucracy, taxes, insurance, inspection costs and any works or improvements at home should be taken into account. These additional costs can represent a significant part of your total budget, so it’s crucial to include them in your financial planning. Another essential tip is to check your effort rate. A good credit score can help you get better financing rates and loan terms. Pay your debts, avoid taking on new credits and try to reduce your financial dependencies as much as possible. If necessary, consult a finance expert to help you improve your effort rate before applying for a real estate loan. Finally , set a maximum amount you are willing to pay for the house, considering your financial capacity and the additional expenses mentioned. Stay within this limit to avoid compromising your financial health in the future. Research and compare different financing options, negotiating whenever possible to get the best terms. Planning the budget for a home purchase requires time, dedication and a lot of organization. Having knowledge of these tips will be more prepared to face the challenge, being able to realize the dream in a safe and conscious way. Remember that financial preparation is the key to a successful purchase and to ensuring you enjoy your new home without financial worries. Follow the SUPERCASA Notícias for more tips like this! Will you live alone? Tips to organize
Source: Adobe Stock Author: Redaction Buying a property is one of the biggest inveastments that a person makes in life , and so, as with any other major decision, it is crucial to take the right steps when making the purchase offer. Many buyers, especially first-time buyers, who have never acquired any real estate property may feel lost in this process, but we have good news for you: is not difficult and to help you, we will guide you step by step! Write down the steps required to draw up a winning purchase proposal, increasing the likelihood of being able to buy your dream property and win good deals! 1. Assess your financial situation Before any other step, assessing your financial situation is critical to getting a clear view of your ability to purchase a home. This is where you will determine how much you can invest in a property , considering the purchase value, additional costs - such as taxes and fees - and your monthly expenses. A good starting point will be to calculate your effort fee , which you can do with a bank. By getting this calculation, you will have a sense of how much you will have to spend on the purchase, at an early stage and throughout your life, and thus understand whether it is possible or not to move forward with the acquisition. 2. Search the market Take the time to research the real estate market in the area where you want to buy a house. Analyze the prices of properties similar to the one you want to buy, as well as market trends and characteristics that influence the value of a home. This research will be fundamental to help you define a fair value to propose. However, at this stage, it is advisable to seek the services of a real estate agency that, with its own tools, can present you Comparative Market Analysis , and thus help you to achieve the right and fair selling price. 3. Visit the property It is essential to visit the property in person to have a better perception of its state, characteristics and potential. Take into account the positive and negative points of the property, and do not throw yourself head-first at the house you visit. Evaluate all your needs and expectations, and be realistic about your financial capabilities. 4. Gather documentation To formalize your proposal you will have to present some documents such as proof of identity, taxpayer number, IRS declaration and bank account statement. So, to be prepared and get a speedy process, make sure you have all the documentation in order before submitting your proposal as well as your financial evaluation. 5. Make the offer to the seller or agency The purchase proposal must contain your purchase intentions and information such as buyer and seller identification, property data, proposed value, payment method and deadlines for the completion of the purchase . The ideal is to have with you the help of a real estate broker, who will represent your interests and follow up the process with all the necessary knowledge bases. And consider that the proposal can be delivered either directly to the seller or to a real estate agent, depending on whether the person selling the property has opted for this type of services or not. And remember: be cordial, show interest and present a fair and proportionate proposal to the conditions indicated in the ad . 7. Negotiate with the seller After the offer is submitted, there may be some reticence on the part of the seller who, in the first instance, may even refuse it. So, you need to be prepared to negotiate with the seller if you even want to buy that property, and try to establish an agreement that is advantageous for both parties. Consider your limits and goals, and be flexible to find fair solutions for both. 8. Enter into the contract-promise of purchase and sale After reaching an agreement with the seller, it will be time to conclude the contract-promise of purchase and sale (CPCV), which formalizes the deal and defines the conditions of the purchase, as the final value of the property, the form of payment and deadlines and penalties in case of withdrawal or non-compliance with any of the clauses. 9. Complete the purchase You will reach the final stage, which means that you will have signed the CPCV and are ready to take the necessary steps to finalize the purchase. At this stage, you must perform the payment of the of the property, the public deed and the registration of ownership, always taking into account that, when accompanied by a specialized professional, everything will be simpler - not only ensures that the process is carried out legally, but it will also have a faster execution of bureaucracies. And to achieve exactly your goals, we leave you some extra tips: • Be proactive and show interest in the property when it is disclosed, contacting the advertiser to visit it; • Present yourself as a serious and reliable buyer; • Be willing to negotiate, but keep your limits in mind, no matter how much you want to buy the property; • Have the guidance of a trusted professional, such as a real estate agent. You can find the ideal real estate agency to accompany you here , ensuring that turns a somewhat complex process into a fast and rewarding experience.
Source: Freepik Author: Redaction The decree-law that stipulates the conditions of the public guarantee in the purchase of first housing, own and permanent, by young people up to 35 years, was published this Wednesday, July 10, in Diário da República, and the measure is expected to advance within 60 days. According to the publication in Diário da República, the document establishes the conditions under which the State can provide personal guarantee to credit institutions with a view to the viability of granting credit to own and permanent housing to young people up to 35 years , fitting to the members of the Government responsible for the areas of finance, housing and youth approve, within a maximum period of 60 days from the entry into force of this Decree-Law, the regulations necessary to the provisions of this Decree-Law . In this way, all young people aged 35 years or less, who buy a house for the first time, will be able to resort to financing up to 100% of housing credit , with the State providing personal guarantee to credit institutions. With this benefit, young people can more easily buy a house, since it is possible to grant credit. According to the document, Banco de Portugal and the Portuguese Association of Banks were heard , stipulating that, in order to access the public guarantee, young people must comply with the requirements determined for this purpose, namely be between 18 and 35 years of age, with tax domicile in Portugal , and have income that does not exceed the 8th tier of the IRS. In addition, in order to be able to benefit from the financing, they cannot own another property that affects the house and the house they acquire cannot exceed the value of 450 thousand euros, being defined as the limit of the guarantee 15% of the transaction value . The Minister of Finance pointed out that the measure was developed jointly with Banco de Portugal, stressing that there is no dispute with Banco de Portugal on the matter, ensuring that Banco de Portugal is involved in the process, having been consultation and coordination with the financial supervisor. Read also: IMT exemption on house purchase will take effect in August
Source: Pixabay Author: Redaction The Bank of Portugal (BdP) released last Thursday, July 4, data on the average interest rate on new housing loans that, in Portugal, fell for the eighth consecutive month, from 3.74% in April to 3.71% in May, falling below the Eurozone average. According to the Portuguese regulatory bank, Portugal had the seventh lowest average interest rate, below the euro area average , adding that in May, the average interest rate of new home loans in all euro area countries has not changed (3.76%). The average interest rate on new housing loans has been falling since September, when it peaked at 4.27%, setting at 5.13% in May this year . Thus, in new contracts, the rate decreased by 0.02 percentage points in chain, reaching 3.61% in May, compared to the same period, in which it was 4.24%. On the other hand, in renegotiated contracts, the average interest rate rose by 0.02 percentage points in chain and 0.09 percentage points in year-on-year terms , reaching 4.06% in May. It was also possible to determine, by the BdP, that 76% of the new housing credits were contracted with the mixed rate , indicating that the increase in the weight of new operations at a mixed rate has been reflected in the recovery of the housing loan stock, in which mixed rate contracts already represent 24% of the housing loan stock in May 2024 (in December 2022 it was 6.4) . The early repayments of the house loans totaled 0.91% of the stock of loans contracted in May, which means 0.02 percentage points less than in April , with total early repayments corresponding to 91% of orders made in May. Other topics that may interest you: Households in the Eurozone and in Portugal are saving more , Interest rates: Governor of the BdP advises ECB to be prudent or House prices: Portugal exceeds the Eurozone and EU average
Source: Freepik Author: Redaction Heard last Wednesday, June 19, in the Committee on Budget and Finance, the Governor of the Bank of Portugal (BdP), Mario Centeno, highlighted his doubts about the measure presented by the Government providing for the public guarantee in the purchase of house , for young people up to 35 years old. According to Mário Centeno, the Government’s proposal, which aims to facilitate access to the purchase of first housing, is risky because it may jeopardize the stability of the market, since it may generate defaults in the payments of mortgage loans. Stimulating housing credit in this context does not seem like a great idea , said the Governor of the BdP, considering that there have been several requests for loans to buy a house. Regarding the stability of the market, the director of the Portuguese regulatory bank noted the work carried out in recent years in the banking sector, a request that does not call into question this stability at a time when there are very low levels of default. According to Mário Centeno, 100% financing in house purchase, instead of the 90% defined as limit by the regulatory bank, may have an impact on higher performance, weighing more on budgets and resulting in an increase in the effort rate: The disruption that everything does to the markets is far greater than the short-term benefit that we can have, he said, making it clear that the risk is in all these dimensions. Stay to read: Public guarantee on house purchase only goes up to 15% of the loan , Profile of new residential credit customers improved in 2023 and What is the pledge in fulfillment? Discover this concept
Source: Freepik Author: Redaction The payment in compliance is nothing more than a legal mechanism, provided for in the Portuguese Civil Code, in articles 837 to 841, which allows the debtor to deliver a good to the creditor as payment of the debt , even if this good is different from the originally agreed. In Portugal, the payment in compliance is particularly important for owners , especially in the context of housing credit. What is in compliance? Also called payment in payment, the payment in fulfillment is a form of payment of the debt, namely credits, and its procedure does not arise from a payment in cash, but in goods. That is, a person with a debt can propose to the creditor the settlement of that debt with a good, using it as a form of payment, instead of money , a situation where the payment in compliance that, to be considered valid, must be accompanied by an agreement between the parties, in this case, creditor and debtor. Without this pledge in fulfillment, the creditor could proceed with the pledge, in order to receive money from the seized assets, however, through a mutual agreement, the debt is extinguished, after the pledge in fulfillment (or payment). What about the mortgage? In the case of residential credit, more specifically, the payment in compliance allows the debtor, with the knowledge of the bank, to transfer ownership of the property to the bank in exchange for the cancellation of the debt, which entails some advantages. Avoids the execution of the property The first advantage is the fact that you do not have to see your property pawned, because the deed in compliance will prevent the forced sale of it, emerging as an alternative to judicial execution. Keeps you as the owner of the property Applicable only in some situations, you can reach agreement with the bank for the stipulation of a grace period before the definitive delivery of the property. Limits debts The payment in compliance extinguishes the debt in question, preventing the growth of interest and other charges. Friendly solution It is an amicable solution between debtor and creditor. Advantages for the debtor In addition to avoiding the execution of the property, keeping it in the possession of the debtor, will allow to limit the debts, since, when delivering the property to the bank, the debt of the debtor against the mortgage credit is extinguished, which prevents the growth of interest and other charges. But the main advantage is that it is a negotiated solution, which allows an amicable solution, without conflicts or the emotional strain of a judicial process. Advantages for the creditor For the creditor, the payment in compliance emerges as a positive alternative, because, in addition to receiving the payment of the debt, it will avoid the costs of execution, which in addition to being a lengthy process, is quite expensive. Therefore, you already know: the payment in compliance is an extremely advantageous legal instrument in cases of default, especially for mortgage lenders, but also for creditors, who can expedite this process more amicably. We suggest you also read: Can you calculate your effort rate? Find out everything
Source: Freepik Author: Redaction The stress rate is one of the crucial elements when applying for a home loan , acting as the limit for the charges of an aggregate , since it includes the net monthly expenses and income . This calculation will serve as the basis for the allocation of your credit, and there is a recommendation from Banco de Portugal that banks avoid granting loans to people with effort rates above 50%. To be balanced, your effort rate, ideally, cannot exceed 30%, so it is necessary to maintain a prudent and organized management of your finances. And to have this control, it is important to understand the relevance of the effort rate, and that we explain to you in this article. What is the effort rate for? In addition to being a crucial indicator for assessing the financial health of a household, it represents the percentage of total net income for the payment of installments of claims, namely mortgage credit. Determine the ability to pay The effort rate acts as a thermometer of the capacity of a household , determining whether or not it has the financial capacity to meet its commitments, namely a home loan. A very high rate will mean a great effort in the extraordinary payment of expenses, compromising not only their saving capacity, but also their investment capacity, and access to new credits may be restricted. Foster financial sustainability As we explained above, Banco de Portugal recommends that the effort rate of an aggregate should not exceed 50%, where at most only half of a family’s net income can be allocated to the payment of instalments. This board serves to mitigate the financial vulnerability risks of the aggregate, leading to possible defaults, and thus promote financial sustainability that maintains balance in their budgets . To assess the credit risk When a credit is contracted, banks are required to use the stress rate as one of the key indicators in assessing a potential client’s credit risk , as this will influence their responsiveness in unforeseen situations that may arise , whether they have the resources to make ends meet. How do you calculate the effort rate? This is a relatively simple calculation, which we will show you: Mónica earns 1,200€/month net and Dinis earns 820€/month. The two have a housing credit in the amount of 600 € and a car credit in the amount of 95 €. But they also have, monthly, credit card charges, in the amount of 50 €. Doing the math, the couple’s effort rate is 36.8%. Find out how we got to this percentage: Effort Rate = ((600 + 95 + 50) /1,200 + 820) x 100 = 36.8% In this example, the aggregate effort rate is 36.8%, which means that 36.8% of its net income is destined to the payment of installments of credits. This figure is within the recommendation of Banco de Portugal, but it is important to monitor the stress rate on a regular basis and take measures to reduce it if necessary. How can you reduce your effort rate? In situations where effort rates are very high, it is important that you try to renegotiate your loan if you have one. By doing this, you can achieve better financing conditions and a reduction in your effort rate, which can occur through an extension of the payment term. Alternatively, you can always transfer your credit to another bank or financial institution, looking for the best conditions and, if you have more than one loan, consider combining them into one. Here are some tips to reduce your effort rate: • Renegotiate credits that have contracts and try to get better conditions; • Write off the capital of the outstanding claims; • Avoid new credits; • Increase family income; • Reduce unnecessary expenses A controlled effort rate will also allow you greater control over your finances and, consequently, greater financial stability. You will be able to save and invest more, opening doors to new opportunities! Stay with other topics: Differences between a fiador and a avalista: understand them , Housing Credit: what is it and how does Spread work?
Source: Freepik Author: Redaction Last Thursday, Banco de Portugal indicated an increase in the granting of consumer credits, which increased by 3.7% in the first quarter of this year compared to the same period last year. According to the banking supervisor, banks and financial institutions granted more than 2 billion euros in consumer credits, which is the highest value since the beginning of the series in 2013. Behind these figures are, broadly speaking, requests for credit for the purchase of a car, which grew 8.7% to 742.7 million euros in the first quarter of the year . This type of credit represents more than 36% of total consumer loans borrowed by banks in the period under review. For the purchase of used car, loans also escalated, fixing this increase to 11% to 577.4 billion , in which are encompassed leasing operations or ALD with reservation and ownership. In the purchase of new car, on the other hand, credit increased 165.3 million, 1% more than in the same period of 2023 . With regard to credit cards, credit lines, current accounts and short facilities, increases have also been observed, from 7% to 360.6 million euros, which means an 18% increase in consumer credit. Personal credit, in reverse, remains the main share of consumer loans granted, with 45.7%, having fallen from 1% to 928.1 million euros between January and March . In this context, personal credit without a specific purpose fell from 1% to 892.8 billion euros, while personal credit for education, health and renewable energy rose 3% to 35.4 million. Follow other topics such as this: Portuguese economy may grow this year and next , National public spending has set itself at the equivalent of 42.3% of GDP and Inflation in April shows slight decline, settling at 2.2%
Source: Freepik Author: Redaction Next month, a reduction in house installments is expected for contracts that will be reviewed in May, and this time, holders of contracts indexed to the 12-month Euribor will also see a reduction in the monthly payments made to the bank. For a loan of 150,000 euros with a term of 30 years and a spread of 1%, the projections are as follows: Three-month Euribor : the installment over the next three months should be around 795 euros, a reduction of 3.37 euros (-0.42%) compared to the previous installment since February; Six-month Euribor : the installment expected over the next six months will be approximately 790.63 euros, a decrease of 25.18 euros (-3.09%) compared to the previous installment since November; 12-month Euribor : the payment over the next 12 months is expected to fall to around 778.32 euros, a reduction of 4.06 euros (-0.52%) compared to last year. The 12-month Euribor recorded its first drop in the monthly home loan bill since January 2022, before the start of the conflict in Ukraine, at a time when interbank rates were already on the rise due to expectations of tightening monetary policy by the European Central Bank (ECB) to curb inflation. Euribor rates are used to calculate the installments of variable rate contracts , which account for 90% of home loans in Portugal. Last year, rates hit 15-year highs due to the ECBs efforts to combat inflationary pressures, but now, with signs of inflation stabilizing, the central bank is close to starting to reduce its reference rates, possibly from next summer. This results in a trend of easing Euribor rates, which is positive for families. In April, average Euribor rates fell across the three main maturities, with the six-month Euribor recording its sixth consecutive month of decline, reaching its lowest value since July last year. The three-month Euribor has also fallen over the last four months, reaching its lowest level since October. This easing trend is likely to continue in the future, depending on the ECBs monetary policy decisions . From July 2022 until September 2023, the ECB raised its rates by 450 basis points, interrupting the trajectory in September. The next meeting of the governing council is scheduled for June 6, and the last five meetings have kept rates unchanged. The impact of the evolution of the Euribor on the value of the house payment will be determined by the amount of capital still owed . On average, families owe around 65,391 euros to banks on their home loans. SUPERCASA Notícias recommends reading this: Find out which countries have seen the biggest house price increases or Social Security adjusts IRS withholding on pensions
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
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