Home loan: all about expenses and taxes to pay
Home loan expenses vary from bank to bank. And taxes also vary depending on the area and purchase price.
When buying a home using a home loan, you must take into account that it is necessary to pay, from the outset, a set of expenses and taxes associated with the loan. That is why it is important to have savings before purchasing a home with bank financing. In this article, we explain everything you need to know about expenses and taxes to pay for home loans.
How much will you pay for housing credit expenses and taxes?
When you apply for a mortgage to buy a house, the bank will analyze your financial capacity to ensure the payment of the loan in the long term. And to do so, you should consult the map of credit responsibilities – the Bank of Portugal (BdP) blacklist. If the bank guarantees that you have all the conditions to pay the mortgage and gives the green light to the process, it will start the procedures for granting the home loan. It will then inform you of the loan expenses and associated taxes. This value is not arbitrary, it is up to the bank to calculate it. And the bank will take into account the characteristics of your home loan. In general, expenses and taxes approximate 10% of the purchase price. And so you should have that money saved. If you don't have that amount, there are a few ways to get it, as explained here.
How does the payment of home loan expenses and taxes work?
Each bank will have its expenses, so there may be some differences at this point between banking institutions. In addition, it must be borne in mind that taxes also vary according to the purchase area (mainland/islands), purchase price and loan amount - which, as a rule, should be up to 90% of the property purchase price. Still, in most cases, this is how families are aware of the expenses and taxes to pay for the home mortgage:
A home loan is applied for after purchasing different solutions, not least because as “each bank has its expenses and it is also something that must be compared between offers”, says Miguel Cabrita, responsible for idealista/créditohabitação in Portugal;
The bank carries out the feasibility study for granting housing credit, evaluating the effort rate and verifying the BdP's map of responsibilities;
If the bank approves the home loan application and you accept the offer, the entity will ask you for the money necessary to pay the associated expenses and taxes in advance so that there is no shortage of money during the process;
The process of buying and selling the house is carried out, as well as the granting of the home loan;
The bank charges the expenses and taxes associated with the housing loan on the day of the deed;
The bank informs you that expenses and taxes are paid. The customer must review that expenses and taxes are properly paid and notify the entity. If there is any failure, the customer must notify the bank so that the situation is rectified.
Who pays the home loan expenses and taxes?
The expenses and taxes associated with the housing loan are paid by the customer to the bank. That is, it is up to the person interested in buying the house and who goes to the bank looking for financing through a home loan.