With so many steps in the Portugal Real Estate buying process, we know that this experience can seem confusing or challenging. The good news is that the process is relatively simple, fast, and not very bureaucratic. However, there is one very important step that we will address in this article: mortgage pre-qualify! If you are considering buying a property in Portugal with financing, a mortgage pre-qualification is essential and makes the purchasing process easier and more efficient. In this article, we will show you the importance of prequalifying and how to get prequalified for a home loan in Portugal.
Mortgage pre-qualification may seem as complex a process as buying a house, but it is actually just a simple step along the way. Here at CAP International Realty, we work in partnership with various professionals who provide pre-qualification and pre-approval credit services for residents and non-residents in Portugal.
Non Residents are allowed to finance through Portugal banks and take advantage of low interest rates in Europe, as well as long payment terms (up to 30 years). You just need to prove income in your country. Learn everything about the process of financing properties in Portugal by clicking here.
Contrary to what many may think, the service of a mortgage broker is generally not charged to the buyer. At the end of the process, if the purchase is completed, the mortgage broker receives payment in the form of a commission from the bank that provided the loan. After all, the bank will be gaining a new client and providing a credit service, which is part of its business as a financial intermediary.
In this context, the mortgage broker acts as a partner of the bank, reselling the financing service.
What is mortgage pre-qualifying?
Credit pre-qualification in the real estate sector is a process in which a lender or a banking intermediary (mortgage broker) evaluates your basic financial information, such as your income, debts, and credit history, to determine the maximum amount of money you can possibly borrow from the credit market in order to buy a property.
This process also defines the structure of the loan, that is, the composition of “down payment + loan,” where the down payment is the amount you must pay upfront, and the loan is the amount that will be borrowed from the lender. Other factors such as interest rate spreads, repayment terms, and fees can also be estimated during this phase.
It is important to note that pre-qualification does not guarantee the loan. It provides an estimate of the loan amount you could receive. This step is important to help you understand your purchasing power and establish a budget before starting to look for a property.
To find out the exact loan amount and conditions, the next step is to move towards Credit Pre-Approval! Understand in the next topic:
Pre Qualified Vs Pre Approved: Know the difference
You may have heard the terms “pre-qualification” and “pre-approval” in the world of loans. What you may not know is that there is a difference between the two:
Pre-Qualification: Consider pre-qualification as an estimate. This number is not a guarantee because lenders base it on a simple financial analysis. With an estimate of your income, debts, and other details, the lender provides an approximate amount that can be approved. Pre-qualification does not have the same authority as pre-approval, but it will give you an idea of the amount that can be pre-approved.
Pre-Approval: During pre-approval, lenders conduct a detailed analysis of your finances. A document is issued guaranteeing the loan amount. Once the loan is pre-approved, the buyer receives a document (an approval letter) with all the conditions, amounts, and loan rates.
How Long is a Mortgage Pre Approval Good For?
In Portugal, the duration of a mortgage pre-approval can vary depending on the lender. Generally, a mortgage pre-approval is valid for a period of 90 days. This way, the buyer has enough time to enter the market and search for a home. The duration of 90 days, which is generally how long mortgage pre approval last in Portugal, does not mean the approval will expire after that periodo, but the lender can ask for updated info and statements.
Why You Should Do It: Advantages
Getting pre-qualified makes the process more efficient and less stressful. Here are the main advantages:
Know your buying potential: You will have a clearer idea of your purchase budget, narrowing down options within what you can afford in Portugal. Knowing your maximum limit will save you time with properties that are priced too high. At the same time, you will have a more precise understanding of the opportunities you can take advantage of.
Competitiveness: Having your pre-qualification in hand gives you an advantage over other potential buyers. It shows that you are ready and willing to buy a house. Some owners only accept proposals from buyers who have pre-qualification. Owners feel more secure and confident with potential buyers who have already been pre-qualified.
Faster process: Pre-qualification saves time in the buying process because, in order to be qualified, you will have already overcome the most bureaucratic step in obtaining credit. After all, you will have gathered most of the documents and filled out the main forms required by banks. The second step for obtaining the loan, which is pre-approval, will be less laborious.
Problems solved in advance: During the pre-qualification process, you may encounter errors in your credit report, or even in your income statement, or any other documentation. Discovering these problems before buying a house will save you time and hassle.
How To Get Pre Qualified For a Home Loan in Portugal
When and How to Do Credit Pre-Qualification? The fact that you are reading this article right now demonstrates that you are already interested in buying a property in Portugal and possibly in the research phase. Therefore, now is a good time to do pre-qualification.
We at CAP International Realty can guide you through this process by introducing trusted mortgage brokers who have been working with us for years, focusing on the Brazilian audience.
It is worth remembering that Brazilians are allowed to finance through banks in Portugal and only need to prove income in Brazil.
About CAP International Realty
CAP International is a gobal full-service luxury brokerage firm with expertise in the Portuguese real estate market. With our extensive knowledge of the area, exclusive access to premium listings, and a commitment to personalized service, we are here to guide you every step of the way. We invite you to contact us today. Call us now or let’s talk via WhatsApp: Click here to start the conversation now via WhatsApp (Bruna Barros)