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Youth housing credit: all you need to know

17 АПРЕЛЯ 2024
Темы
Dicas Imóveis Bancos Euribor Taxas de Juro Comprar Casa em Portugal Preço das Casas Prestação da Casa Spread Taxa de Esforço Crédito Habitação Despesas Proprietários Jovens
Buying a house is a step that many young people dream of taking. Find out everything you need to take into account to ask for this financing.
Youth housing credit: all you need to know

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 start, before proceeding with a request from 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 at least 10% of the total sale value of the property, however, it is advisable that if you can and have this amount, 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!

Темы
Dicas Imóveis Bancos Euribor Taxas de Juro Comprar Casa em Portugal Preço das Casas Prestação da Casa Spread Taxa de Esforço Crédito Habitação Despesas Proprietários Jovens
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