GLOSSARY
Mortgage terms, explained
The words you will hear at the bank and read in the offers, in plain language. Each term has its own link, so you can share it or come back to it.
DSTI
Debt Service-to-Income. The ratio between the household’s monthly loan repayments and its net monthly income. Banco de Portugal recommends keeping it under control when assessing new loans.
Euribor
Euro Interbank Offered Rate. The reference rate at which banks lend to each other; it is the most common index for variable-rate mortgages (3, 6 or 12 months).
Guarantor
A person who takes responsibility for repaying the loan if the borrower fails to. It strengthens the security behind the operation.
LTV
Loan-to-Value. The ratio between the loan amount and the lower of the purchase price and the property valuation. For a first home as your main residence, the recommended limit is 90%.
MTIC
Total Amount Payable by the Consumer (Montante Total Imputado ao Consumidor). The sum of everything the client pays over the life of the loan: capital, interest and charges. A key indicator of the overall cost.
Spread
The margin the bank adds to the index (Euribor) on a variable rate. The lower the spread, the lower the cost to the client.
TAEG (APRC)
Taxa Anual de Encargos Efetiva Global, the Portuguese Annual Percentage Rate of Charge. It reflects the total cost of the loan (interest, fees, insurance and taxes) as an annual percentage, so you can compare offers.
TAN (nominal rate)
Taxa Anual Nominal, the nominal annual interest rate. The base interest rate of the loan, before other charges. It can be fixed, variable (Euribor + spread) or mixed.