If I transfer my credit, do the financing limits remain the same?
The Bank of Portugal (BdP) defined in 2018 some measures to limit bank financing in credit contracts. But do they also apply to transfers? Find out next.
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What are the current financing limits on credit?
Currently, there are limits on bank funding for loans granted, due to the macroprudential measure of the Bank of Portugal (BdP).
This measure implies that, as of July 1, 2018, there are limits to financing imposed: the ratio between the amount of the mortgage loan with mortgage guarantee or equivalent and the value of the property that serves as collateral (LTV - Loan-to-value), and the ratio between the monthly debt service costs associated with all borrower loans and their net monthly income after taxes and mandatory contributions to Social Security (DSTI).
The limits on financing, that is, the ratio between the loan amount and the value of the property given as collateral (LTV - Loan-to-value) are currently as follows:
- 90% of credits for own and permanent housing; https://www.poupancanominuto.com/credito-habitacao
- 80% for credits for purposes other than own and permanent housing;
- 100% credit for the acquisition of properties owned by institutions and financial real estate leasing contracts.
The ratio between the amount of monthly payments calculated with all the borrower's loans and their net income (DSTI - Debt service-to-income) corresponds to 50%, with the following exceptions:
- 10% of the total amount of credits granted by each institution covered by this measure can be granted to borrowers with DTI up to 60%.
- 5% of the total amount of credits granted by each institution covered by this measure, may exceed the limits provided for DSTI.
If I transfer my credit, do these financing limits remain?
According to the recommendation, the macroprudential measure applies to credit agreements - understood as "the contract by which an institution grants or promises to grant to a consumer credit in the form of a loan, payment deferral, revolving credit, or any other similar financing agreement. As well as financial leasing, with the exceptions provided for in article 1, namely those relating to credit agreements intended to prevent or regularize situations of default (namely through refinancing or consolidation of other credit agreements, as well as the amendment of the terms and conditions of existing credit agreements)."
Considering that, then, credit transfers are not included in these exceptions. Because when transferring credit to a new institution, a new contract is made between the borrower and that entity to which the credit is being transferred. (Source: https://www.poupancanominuto.com/credito-habitacao?utm_source=poupanca-no-minuto&utm_medium=artigo&utm_campaign=385-transferir-o-credito)
In other words, when celebrating a new contract, this institution must comply with a set of procedures, particularly regarding the assessment of the risk underlying the operation, including the assessment of the client's solvency. Therefore, all institutions are obliged to comply with these procedures in all new contract celebrations, regardless of whether the contract results from a credit transfer or not, always subject to the criteria of the BdP recommendation.
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