Mortgage credit: TAN, TAEG and the main indicators

Key points

This guide explains the indicators that appear in mortgage credit offers in Portugal, to help you compare them more confidently. It does not replace a personalised simulation or financial advice suited to your case.

1. TAN and TAEG: what is the difference

The Nominal Annual Rate (TAN) reflects only the loan's interest, calculated from the reference rate — usually Euribor — plus the spread set by the credit institution.

The Annual Percentage Rate of Charge (TAEG) includes TAN plus fees, taxes, required insurance and other loan-related costs, making it more representative of the total cost of the loan. When comparing offers from different banks, always compare TAEG, not just TAN.

• Understand that TAN reflects only the loan's interest.
• Understand that TAEG includes interest, fees, insurance and other costs.
• Compare offers using TAEG, not just TAN.

2. Euribor and spread

Euribor is the reference rate of the European interbank money market, derived from the average rates quoted by a panel of European banks, and is used as the reference rate for variable or mixed-rate loans.

The spread is the component the credit institution adds to Euribor, freely set by each bank based on factors such as the customer's credit risk, the loan-to-value (LTV) ratio and the bank's own funding cost.

• Confirm the reference rate (usually Euribor) and its term.
• Understand that the spread varies with the customer's risk profile and LTV.
• Compare the spread across offers for the same profile.

3. Fixed, variable or mixed rate

With a variable-rate loan, the instalment follows changes in Euribor, which can increase or decrease payments over time. With a fixed-rate loan, the rate stays stable for a period or until the end of the contract, offering predictability, usually with a different initial spread.

A mixed-rate loan combines an initial fixed-rate period with a later variable-rate period. Assess your tolerance for instalment changes and the loan's time horizon before choosing between these options.

• Understand the differences between fixed, variable and mixed rates.
• Consider your tolerance for changes in the monthly instalment.
• Confirm how long each regime applies if you choose a mixed rate.

4. FINE and comparing offers

Before taking out a mortgage, the credit institution must provide the European Standardised Information Sheet (FINE), a standardised document that is identical across all financial institutions, which makes direct comparison between offers easier.

FINE details the TAN, its breakdown, and other loan-related costs such as fees, expenses and required insurance. Request and compare the FINE from several institutions before deciding.

• Request the FINE from each institution before deciding.
• Compare TAN, TAEG and the costs detailed in the FINE.
• Do not decide based only on an informal simulation.

5. Household budget capacity

Before granting credit, the institution assesses the household's ability to meet its obligations, considering income, fixed expenses and other ongoing loans. This assessment protects both the bank and the customer from excessive debt.

When planning your purchase, consider not just the monthly loan instalment but also your other fixed costs, to keep a safety margin in your budget.

• Understand that the bank assesses financial capacity before granting credit.
• Consider all loans and fixed expenses in your budget.
• Keep a safety margin beyond the monthly instalment.