Buying a house: discover 5 mistakes to avoid

Buying a home is one of the most important decisions you can make. Therefore, it is essential that this is done consciously and safely. In this article we explain everything.

According to the Observatory’s study on the real estate market, among the main reasons for buying your own house is the fact that it is an investment, it costs as much to buy as it does to rent and it becomes an inheritance left to descendants.

Currently in Portugal the percentage of people who live in their own home is higher than that of those who rent: 77.3% of Portuguese, according to Eurostat. However, this very important decision also has a huge financial impact. Especially if we take into account that «the percentage of families who own a home has increased, especially those with expenses», as stated in the publication Owning a home in Portugal from an intergenerational perspective.

The same source adds that these charges cease only «when the contractor reaches retirement age, around 65». Furthermore, according to the Jornal Economico, 77.5% of Portuguese who buy a house use credit.

So, when buying a home, make a responsible decision and avoid making the five mistakes listed below.

1. Not carefully evaluating your financial ability and stability when purchasing a home

If you use credit, it will need to be approved by the bank, but it will need to be approved by you first. In other words, evaluate your financial capacity and stability in advance by asking yourself these questions:

Do I have the ability to meet loan obligations? When buying a home, know how much you can afford and don’t go over that limit. Also: Make sure this limit leaves you wiggle room to deal with unexpected events.

Do I have a stable job? If you are not part of the permanent staff of the institution where you work, or if you have recently changed jobs and are still on a probationary period, perhaps you should wait a little longer.

Can I pay a deposit? As a rule, the bank finances the purchase of your home at 90%. The remaining 10% is called the deposit and payment principle which must be assumed by the buyer, through a promissory purchase contract (CPCV). This contract is legally valid and requires compliance. The larger the down payment, the smaller the amount you will ask the bank for.

2. Don’t consider additional costs

You have found your dream home and the bank has approved the loan. Now you can breathe a sigh of relief and close the expense chapter, right? Wrong. There are also other costs to consider:

Bureaucratic costs: The deed of sale of the property is mandatory and involves notary and registration fees. There are also mandatory documents (see point 4) whose costs may be charged to you. In case of financing you will also have to bear the costs of the credit procedure.

Tax costs: Anyone who buys a house must pay taxes: the Municipal Transaction Tax (IMT); the Stamp Duty (relating to the value of the deed and the financed amount, in case of use of the credit) and the Municipal Property Tax (IMI), paid annually.

Insurance costs: If you use credit to buy a home, you are required to get life insurance. Home Credit Life Insurance by Generali Tranquilidade It has numerous advantages, such as an additional 20% discount for healthy customers and a simple subscription, without having to leave home.

Check out this article if you have questions about which coverage to purchase. The law also provides fire (or multi-risk) insurance for horizontally owned buildings. However, multi-risk insurance is usually taken out as it is more comprehensive.

Home insurance by Generali Tranquilidade provides protection against serious damage (fire and flood), theft or theft and much more.

Other costs: In addition to the usual costs of any house (water, electricity, gas, etc.), if you buy a house in horizontal ownership, you will have to pay condominium expenses.