Question 1

What affects the amount of the monthly payment?

Accepted Answer

The amount of the monthly payment depends on several factors: the amount financed, the outstanding principal, the loan term, the interest rate (spread and index, where applicable), the rate type (fixed, variable or mixed) and any early repayments.

Question 2

What is the difference between fixed, variable and mixed rates?

Accepted Answer

With a variable rate, the interest rate follows the evolution of Euribor. Whenever Euribor is reviewed (usually every 3, 6 or 12 months), the monthly payment may go up or down.
With a fixed rate, the interest rate remains unchanged throughout the agreed period, providing stability in the monthly payment. As a rule, the initial payment is higher than with a variable rate.
A mixed rate combines both options. During an initial period (usually 2, 5, 10 or more years) a fixed rate applies and, after that period ends, the loan switches to a variable rate indexed to Euribor.
The choice depends on your risk profile, expectations about how interest rates will evolve and how predictable you want your household budget to be.

Question 3

How much do banks finance?

Accepted Answer

As a rule, banks finance up to 90% of the lower amount between the purchase price and the appraisal value for a primary residence.
For a second home or properties intended for investment, the financing limit is usually lower and varies from institution to institution.
Until December 31, 2026, there is a public guarantee scheme for young people in force, which allows eligible clients to obtain financing of up to 100% of the purchase price, for homes up to 450 000 €, provided that all legal requirements and the credit institution’s approval criteria are met.

Question 4

What is Euribor and what impact does it have?

Accepted Answer

Euribor is the most commonly used index in variable-rate Mortgages in Portugal.
When Euribor rises, the monthly payment tends to increase. When it falls, the monthly payment tends to decrease.
Anyone choosing a variable rate must be prepared for these fluctuations over the life of the loan.

Question 5

Is it possible to buy a home with no down payment?

Accepted Answer

In most situations, buyers need their own funds, since banks usually finance up to 90% of the property value.
However, until December 31, 2026, young people who meet the requirements for the public guarantee can benefit from financing of up to 100% of the purchase price, for homes up to 450 000 €.
It is important to remember that there are still expenses that are usually not financed, such as appraisal, deed, registrations, taxes (when applicable) and other costs associated with the process.

Question 6

What is the difference between effort rate and DSTI?

Accepted Answer

Although they are often confused, they are different concepts.
The effort rate corresponds to the percentage of net monthly income used to pay loan installments under current conditions.
DSTI (Debt Service-to-Income) is the indicator used by banks to assess a client’s borrowing capacity. Unlike the effort rate, it also considers a stress scenario, simulating an increase in interest rates on loans exposed to that risk and applying the assumptions set out in Banco de Portugal’s macroprudential recommendations.
Thus, a household may have a current effort rate of 38%, but a higher DSTI due to the impact of that simulation.
Since August 1, 2026, Banco de Portugal’s macroprudential recommendation has advised banks, as a general rule, to apply a maximum DSTI of 45%; each bank may exceed this limit in a small portion of the loans it grants.

Question 7

Is it mandatory to open an account with the bank and take out life insurance?

Accepted Answer

The law does not require you to open an account or take out insurance with the institution granting the credit.
However, it is common practice for banks to make certain commercial conditions, such as lower spreads, conditional on salary domiciliation or the purchase of certain products.
Whenever life insurance or multi-risk insurance is required, the client generally has the freedom to choose the insurer, provided the policy meets the institution’s requirements.

Question 8

Can I transfer the credit to another bank?

Accepted Answer

Yes. You can transfer the credit to another institution at any time during the term of the contract.
The new institution usually handles most of the administrative process, and the transfer may allow you to reduce the monthly payment, obtain a more competitive spread, improve the associated insurance or reduce the total cost of the financing.
Transfer fees are subject to the legal limits in force, and there may be transitional schemes that temporarily change these amounts.

Question 9

What is a Mortgage?

Accepted Answer

A Mortgage is a loan granted by a credit institution to finance the purchase, construction or renovation of a property intended as a primary residence, second home or for rental.
It can also be used to purchase land for construction, to transfer an existing Mortgage to another institution or to finance the down payment on the future purchase of a property.
As a rule, the loan is secured by a mortgage over the financed property.

Question 10

What is the Mortgage monthly payment?

Accepted Answer

The monthly payment is the amount you pay the bank every month for the loan.
It is usually made up of principal repayment and loan interest, and may also include, when taken out through the bank, the premiums of the associated insurance policies.

Question 11

How does the term affect the cost of the credit?

Accepted Answer

The longer the loan term, the lower the monthly payment, but the higher the total amount of interest paid over the life of the contract.
On the other hand, a shorter term means a higher monthly payment, but significantly reduces the total cost of the credit.

Question 12

What should I consider before taking out a Mortgage?

Accepted Answer

Before taking out a loan, you should assess your current and future financial capacity, your effort rate and DSTI, the stability of your income, the existence of other loans and the possibility of interest rate increases.
You should also compare the conditions offered by several banks, looking at TAN, TAEG, MTIC, the spread, the rate type, insurance, fees and other charges.
The decision should not be based only on the monthly payment, but on the overall cost of the financing.

Question 13

What documents do I need to run a simulation?

Accepted Answer

The documents most commonly requested are the Citizen Card, the latest pay slips, the IRS tax return and respective assessment notice, the Banco de Portugal credit liabilities report, bank statements (when requested) and proof of any other income, where applicable.
The more complete the information, the more accurate the simulation will be.

Question 14

Can the bank refuse to grant me the loan?

Accepted Answer

Yes. Approval depends on the assessment carried out by the financial institution.
Among the most relevant factors are disposable income, job stability, effort rate, DSTI, credit history, the Banco de Portugal liabilities report and the property’s appraisal value.

Question 15

How do I choose the best Mortgage?

Accepted Answer

The cheapest credit is not always the one with the lowest spread.
When comparing conditions from different banks, you should look at the spread, TAN, TAEG, MTIC, rate type, insurance, fees and the flexibility for early repayments or a future transfer.
A global analysis makes it possible to identify the most advantageous solution for each situation.

Question 16

Can I repay part of the loan early?

Accepted Answer

Yes. You can repay the loan in full or in part at any time, subject to the notice periods set out in law and in the contract.
Early repayment fees are legally capped, and there may be transitional schemes defined by the Government that temporarily change these limits.
Repayment allows you to reduce the outstanding principal and, consequently, lower the monthly payment or, alternatively, shorten the loan term, subject to agreement with the institution.

Question 17

Does this calculator tell me exactly how much I will pay?

Accepted Answer

Not exactly: it allows you to estimate the monthly payment based on the loan amount, term, rate type and interest rate.
This is an indicative simulation. The final payment will always depend on the conditions approved by the financial institution, the property appraisal and the client’s profile.

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