MORTGAGE TERMS
Understanding commonly used terms in mortgage agreements
Taxa Anual de Encargos Efetiva Global
(TAEG)
Represents the total cost of the loan to the customer and is expressed as a percentage of the amount that is lent by the bank. i.e All loan fees; insurance required; account fees; tax expenses and registration costs if applicable.
Loan to Value (LTV)
LTV is a ratio that corresponds to the percentage to be requested from banks in relation to the value of the property. It's the ratio of what you borrow as a mortgage against how much you pay as a deposit / down-payment.
Hipoteca
A hipoteca is nothing more than a mortgage. It's the guarantee that the property owner presents as a commitment to his obligation to repay the loan.
Mortgage credit for individuals is commonly called "crédito habitação" (home credit) in Portuguese.
Imposto Municipal sobre as Transmissões Onerosas de Imóveis (IMT)
Municipal Tax on Property Transfers. It is a mandatory cost payable to the Portuguese state when buying a home. This cost is generally paid on the day of the property registration and always in the form of a debit card payment either at a credit card point or ATM banking machine.
Taxa de Esforço
The taxa de esforço corresponds to the percentage of family income allocated to the payment of credit installments that have been contracted. Every bank has a different taxa de esforço from which they base their assessments on.
Avaliação de imóveis
The property valuation allows the financial institution to know how much the house is worth and, thus, make a decision about granting a mortgage loan to you. This is, then, a cost that you will have to bear right at the beginning of the home purchase.
Escritura
The deed / registration is the final stage of the contract for the acquisition of a property and it is through this stage that the person who will acquire the house becomes its legal owner.
Taxa fixa e taxa variável
The Fixed Interest Rate (taxa fixa) is an interest rate agreed with the Bank for a certain period and which remains unchanged during that period of time.
Taxa váriavel corresponds to the average interest rates charged by banks. The Euribor is the general point of reference.