Buying a house is one of the most important steps in life — but before taking out a mortgage, there are several factors that can make all the difference in your financial future.
Many people focus only on the monthly payment. However, a mortgage involves much more than that. Knowing the costs, risks, and market conditions can prevent surprises and help you make safer decisions.
- The Payment Isn't the Only Cost
One of the most common mistakes is calculating only the monthly payment to the bank. In addition to the payment, there are other important charges:
- Initial down payment
- Taxes
- Deed registration
- Mandatory insurance
- Bank fees
- Property appraisal
In practice, buying a house requires more financial preparation than many imagine.
2. The Higher the Down Payment, the Better
Banks typically finance up to 80% or 90% of the property value. This means the buyer needs to have available assets.
The larger the initial down payment:
- The lower the financed amount.
- The lower the monthly payment.
- The better the credit terms may be.
Having savings remains one of the biggest advantages in loan approval.
3. Debt-to-Income Ratio is Decisive
Banks analyze the so-called "debt-to-income ratio," that is, the percentage of monthly income committed to loans.
Ideally, this value should not exceed 35%.
If there are already personal loans, car loans, or credit cards with debt, approval may become more difficult.
4. Fixed or Variable Rate?
This is one of the most important decisions.
Variable Rate:
- The installment may increase or decrease according to the Selic rate (Brazil's benchmark interest rate).
Fixed Rate:
- The installment remains the same during the contracted period, offering greater stability.
The choice depends on the financial profile, risk tolerance, and outlook for the future.
5. Financial History Matters a Lot
Late payments, defaults, or excessive credit can negatively influence approval.
Before applying for financing, it's important to:
- Settle debts
- Avoid taking out new loans
- Organize financial documentation
- Ensure professional stability
6. Pre-Approval Can Give You an Advantage
In a competitive real estate market, having bank pre-approval can greatly accelerate the buying process.
Besides providing security to the seller, it allows you to know exactly:
- How much you can finance
- What your actual available budget is
- What type of property to look for
7. Comparing Banks is Fundamental
The differences between offers can represent thousands of euros over the course of the contract.
The lowest installment doesn't always mean the best deal. It's essential to analyze:
- APR (Annual Percentage Rate)
- MTIC (Total Cost of Credit)
- Associated insurance
- Commissions
- Contract flexibility
Buying a House Should Be an Informed Decision
A mortgage loan is a long-term commitment. The more preparation, the lower the risk of future difficulties.
More than just getting approval, it's important to ensure that the financing truly adapts to each family's financial reality.
Because buying a house shouldn't just be possible — it should be sustainable.
Sources:
- Bank of Portugal
- Banking Customer Portal