Decreto-Lei n.º 74-A/2017
- Tipo de Diploma:Decreto-Lei
- Páginas:3188-(2) a 3188-(23)
Summary in plain english (Without legal value)
What is it?
This decree-law introduces into Portuguese law the rules on mortgage loans — or comparable security — from the European directive 2014/17/EU on credit agreements for housing property.
The rules of this decree-law also apply to:
- mortgage loans or other rights over property other than housing
- property leasing contracts for housing (permanent or secondary) or for lease.
This decree-law does not apply to credit agreements:
- without mortgage for construction works on housing property
- in which the credit is only for the employees of a particular company, as a job benefit, with no interest or with an annual percentage rate (TAEG) below the market value.
What is a mortgage loan or comparable security?
In credit agreements with a mortgage or comparable security, a bank lends their client money to buy, build or refurbish a house and that house is given as a bank guarantee. This means that if the customer does not repay the loan, the bank gets the house.
What is a property leasing contract?
A property leasing contract is a way of financing the purchase or building of a house.
A leasing company finances the purchase or construction of a house and makes it available to their client for an agreed period of time (from 5 to 30 years). During this time, the client pays rent (calculated on the basis of the house value, the deeds and registrations). In the end, the house can be bought at its residual value — the amount the client has not yet paid with rent.
What is the annual percentage rate (TAEG)?
TAEG is the actual interest rate the client pays for a loan. It includes interest, taxes, commissions and insurance.
What information does it contain?
This decree-law defines several rules, including:
- how to provide information to the consumer, before signing a credit agreement, using the European Standardized Information Sheet
- how to calculate the annual percentage rate (TAEG)
- how credit advertising can be done
- the obligation to make things clear for the consumer so they can better assess the suitability of the credit agreement
- ensuring that all credit providers have access to the database that allows them to assess whether the consumer will be able to repay the credit
- sales that can and cannot be made together with the credit agreement
- the information that has to be provided while the credit agreement is in effect
- assessment of the consumer's ability to repay the credit
- ensuring that the consumer is able to make a rational and informed decision on the characteristics of that credit
- ensuring that consumers and guarantors have enough time to assess the implications of the credit or security
- ensuring that the workers and service providers of the credit providing entities have the knowledge and skills to carry out their tasks with quality and efficiency and to provide useful explanations to consumers
- ensuring that an independent asset valuer is contacted when a property appraisal is needed
- wages of workers and contractors of credit providers — in order to ensure adequate selling techniques, employees’ neutrality and quality of the services provided
- ensuring that credit providers offer ways to resolve potential conflicts without having to go to court, such as arbitration.
What are its benefits?
This decree-law is intended to guarantee the protection of consumers who get a mortgage loan or a property leasing contract.
When does it come into effect?
This decree-law comes into effect on 1 January 2018. The obligation to publish online the identification of the nominal annual rate benchmark, the identification of the benchmark’s administrator and its potential implications for the consumer only applies from 1 July 2018.