How real estate financing works, from start to finish

Real estate financing seems simple until it's time to decide. The core idea is easy to understand — you apply for credit, get assessed, and pay it back in instalments over the years — but the technical terms tend to confuse people just getting started. Let's break each one down.

The down payment and the financed amount

The down payment is the part of the property's price paid up front, straight to the seller. The rest is the financed amount, which the financial institution releases and you pay back in instalments, with interest, over the contracted term.

How the credit assessment works

Before approving, the institution assesses income, history and ability to pay. Once the credit is approved, the agreed amount is released — to buy, build or renovate, depending on the line contracted — and you start paying instalments according to the schedule set out in the contract.

Amortisation schedule: what it's for

It's the schedule that shows, month by month, how much of the instalment goes to interest and how much reduces the outstanding balance. There are different amortisation formats, and the one chosen changes the instalment amount over time.

Financing is not an investment and does not generate returns. It's an acquisition mechanism, with a defined term and a cost set out in the contract.

Who it makes sense for

Financing works for those who have already decided on the property and want to use it right away — to live in, rent out or start building — paying off the credit gradually, as their income allows.