Mortgages: what the bank will ask for

• A valid identity document; for foreign nationals, also proof of residence permit, where applicable
• NIF, the Portuguese tax number
• Proof of address
• A document proving your marital status, if the bank asks for it
• Credit liability statement (mapa de responsabilidades de crédito): the list of the loans you have in your name at every bank, requested free of charge from the Banco de Portugal

This is what weighs most in the bank's decision. The number of months or years asked for varies from bank to bank, but the set of documents is similar:

Employees:

your most recent payslips, a letter from your employer stating the type of contract and how long you have worked there, and your latest IRS (income tax) return with the assessment notice (nota de liquidação, the tax authority's document with the result of the tax).

Self-employed and business owners:

your IRS returns for recent years, the invoices you have issued and statements showing you owe nothing to the tax authority or to Social Security. Banks usually ask for a longer track record, because income varies more.

In every case:

your bank statements for recent months, where the bank checks that your income comes in and what your fixed outgoings are.

Income from outside Portugal:

the equivalent documents from the country of origin, often with a translation. Each bank has its own rules for these cases.

Once you have chosen the home, the bank needs the property documents to value it and prepare the contract:

• caderneta predial, the property's record at the tax authority
• certidão permanente do registo predial, the land registry certificate, which shows who owns the property and whether there are mortgages or other charges on it
• energy certificate
• the promissory contract of sale (CPCV), if it has already been signed
• floor plan of the home, in some cases

Debt-to-income ratio (taxa de esforço):

the share of your monthly income taken up by loan repayments, including the new one. The Banco de Portugal recommends limits for this ratio, and banks follow them in their assessment.

Deposit:

the amount you pay with your own money. Banks do not usually finance the full value of the home, and a bigger deposit can improve the terms you are offered.

Income stability:

the type of employment contract, how long you have held it and how regular your income is.

Credit history:

how you repaid previous loans and what loans you have today, which the bank checks with the Banco de Portugal's Central Credit Register.

Age and term:

the length of the loan has limits and also depends on the age of the applicant.

TAN:

the nominal annual rate, the interest you pay on the money you borrow.

TAEG:

the annual percentage rate of charge (APRC): the total cost of the loan in a single figure, including interest, fees, compulsory insurance and taxes. It is the right figure for comparing offers from different banks.

Euribor:

the reference rate at which banks in the euro area lend to each other. On a variable-rate mortgage, the interest follows Euribor.

Spread:

the margin the bank adds to Euribor. It is fixed in the contract and is one of the parts that can be negotiated.

Fixed, variable or mixed rate:

with a fixed rate, the repayment does not change for the agreed period; with a variable rate, it goes up and down with Euribor; a mixed rate starts fixed for a few years and then becomes variable.

FINE:

the European Standardised Information Sheet (ESIS), the document the bank gives you with the terms of its offer. It has the same format at every bank, so that offers can be compared side by side.

• Gather the documents before asking for simulations, so the offers are based on real figures.
• Avoid taking on new credit in the months before you apply, including buying on instalments.
• Review your credit cards: the available limit can count as a liability, even if you do not use it.
• Make sure your bank statements show your income coming in regularly.
• Compare the FINE from several banks by the TAEG, not just by the repayment.