The financing decision is made once the house has been chosen and all the documentation has been sent for risk analysis. It is at this point that all the information supporting the documentation is analyzed, namely:
- Information on the holders of the loan and the composition of the household - relevant information is analyzed such as the composition of the household, marital status, the age of the holders and the number of dependents.
- Information on income and charges - this is when the latest payslips or bank statements are analyzed to confirm income, current credit charges, professional situations and employment relationships. If a lot of time has passed between the initial analysis and the assessment of the loan application, it may be necessary to update the documents relating to the identity and financial situation of the household;
- Verification of liabilities with the Bank of Portugal - this is used to confirm the history of compliance with past credit liabilities and the current credit liabilities of the holders. In other words, it makes it possible to check whether there have been any defaults in the past and to assess the holders' debt profile.
- Legal checks on the property at the registry office (such as consulting the property's CRP) - This is used to identify the current owner and inform the bank of any impediments to setting up the mortgage.
- Property appraisal - conducted by an independent expert, once completed it results in a report with the value attributed to the house and the main criteria used to determine it. The valuation of the property may have an impact on approval or force a review of the financial conditions of the mortgage, if the value is lower than expected.
Once the information has been analyzed and the procedures completed, the financial institution will then be in a position to approve (or not) the loan application. However, if the answer is positive, the European Standardized Information Sheet (ESIS) will be issued, along with the final approval letter and the draft credit agreement.
In fact, it is in these documents that you can check the final conditions of the loan and make an informed decision before going ahead with the deed. You should consider it calmly, but pay attention to the validity of the approval letter.
Source: uci