{"id":657,"date":"2025-02-28T14:35:30","date_gmt":"2025-02-28T14:35:30","guid":{"rendered":"https:\/\/leadkash.pt\/taxa-de-esforco-e-teste-de-esforco-o-que-os-distingue\/"},"modified":"2025-02-28T14:40:34","modified_gmt":"2025-02-28T14:40:34","slug":"effort-rate-vs-stress-test-understanding-the-key-differences","status":"publish","type":"post","link":"https:\/\/leadkash.pt\/en\/effort-rate-vs-stress-test-understanding-the-key-differences\/","title":{"rendered":"Effort Rate vs. Stress Test: Understanding the Key Differences"},"content":{"rendered":"

When applying for a mortgage, it\u2019s crucial to consider your effort rate. However, it\u2019s equally important to know that banks also use a stress test, commonly referred to as the stress rate, to determine whether they will approve your loan request.<\/p>\n

Effort Rate and Stress Test: Different Concepts<\/strong><\/h2>\n

Yes, they are different. Financial institutions use both to assess whether or not to approve your loan application. This is because both measures relate to your ability to meet financial commitments.<\/p>\n

Effort Rate: What Is It and Why Do Banks Use It?<\/strong><\/h2>\n

The effort rate represents the portion of your net income allocated to your financial obligations, expressed as a percentage. In other words, it is the ratio between your total monthly financial commitments and your net salary.<\/p>\n

To calculate yours, sum up your monthly payments for existing loans (including credit card payments), add the expected monthly mortgage payment (if you don\u2019t know it yet, you can simulate it here<\/a>), and divide by your monthly net income. The ideal maximum effort rate is 35%, but some financial institutions may set different limits.<\/p>\n

Banks use the effort rate to determine whether you have the financial capacity to repay the loan you applied for. This is because they assume that, in case of financial difficulties, you may stop paying your loans to cover other essential monthly expenses, such as food.<\/p>\n

Stress Test: What Is It and Why Do Banks Use It?<\/strong><\/h2>\n

The stress test consists of applying a percentage increase to the interest rate in effect at the time of the loan application and recalculating your effort rate. The purpose is to ensure that, even if interest rates rise, you will still be able to afford your loan payments.<\/p>\n

For example, if your effort rate at the time of the mortgage application is 35%, but after applying the stress test, it rises to 50%, your loan request is likely to be declined.<\/p>\n

What Data Do Banks Use for These Calculations?<\/h2>\n

Banks calculate your effort rate based on your declared monthly income and existing financial obligations. To obtain this information, they consult the Central Credit Register of the Bank of Portugal, specifically your Credit Responsibility Map, which you must authorize them to access when applying for a loan. You may refuse this authorization, but in that case, the bank will not proceed with your credit application.<\/p>\n

Additionally, as required by the Bank of Portugal, banks must apply the stress test before making a final decision on whether to approve or deny your loan.<\/p>\n

The Stress Test Rate Is Set by the Bank of Portugal<\/strong><\/h2>\n

With the introduction of Instruction No. 23\/2023 by the Bank of Portugal<\/a>, the stress test rate for variable or mixed-rate loans has been adjusted as follows:<\/p>\n