What are the costs of buying a house?
The monthly payment is just the tip of the iceberg.Find here the list of all the costs you will have until the day of the deed and the monthly expenses that add to the mortgage payment.The monthly payment amount is the first answer we want to have. However, it is only part of the real cost of buying and maintaining a home. There is a range of other expenses to consider, both before and after you move into the house.
1. Before choosing the house
To ensure the purchase doesn't fail, start by knowing what financing amount you can obtain from banking institutions. Request a pre-approval from the bank, based on your income and expenses (the "famous" effort rate), and confirm that the result does not compromise the savings you have set aside for unforeseen events and additional expenses.
But, be careful, the amount the bank is willing to lend is not necessarily the amount you should ask for.
With this information in mind, narrow down your search. Consider the type and kind of property (apartment, house, or construction), necessary renovations, furniture, maintenance costs, and the quality of life you want to have in the long term.
2. What costs do I have when proceeding with the mortgage?
2.1. Monthly payment
With the house chosen, it's time to talk to the bank. The conditions you choose (type of interest rate, spread, and term) will define the amount of your monthly payment.
The longer the financing term, the lower the monthly payment will generally be. However, the total interest to be paid until the end of the loan will be higher. This does not mean that choosing the maximum term is a mistake. The mistake is choosing it without understanding the impact it may have on the cost of the credit and without considering your effort rate.
2.2. Costs up to the deed
Before signing, you need to have money set aside for these costs:
- Down payment, at least 10% of the purchase price
- Bank fees and charges
- IMT
- Stamp Duty on the acquisition
- Deed and registration
- Stamp Duty on the financing
3. What expenses do I have after buying a house?
In addition to the monthly payment, there are other monthly expenses:
- Life insurance and multi-risk insurance
- Account maintenance fee
- Condominium, if you buy an apartment
- IMI, paid once a year or in installments
Some of these costs can be reduced. For example, some banks waive the account maintenance fee under certain conditions, and young people up to 35 years old may be exempt from IMT, Stamp Duty, and registration of the first home purchase.
The monthly payment is important, of course. But it is just the tip of the iceberg of a decision that involves many other variables.
To get a more complete idea, try calculating your mortgage payment with CrediSegur. You indicate the house price, the down payment amount, and the household income, and it shows you the estimated payment, the money you need on the day of the deed, and the income required for the financing, according to the criteria considered by the simulator.
If you have other questions on the topic, speak directly with the CrediSegur credit managers team.
Article by CrediSegur (CRRF – Brokerage, Lda.), a tied credit intermediary registered with Banco de Portugal under no. 0001290. We present proposals from the banks with whom we have a binding contract, identified in the Consumer Information, and we do not provide consulting services. Insurance agent registered with ASF under no. 421571530.
