If you have a mortgage, note that you can pay off part or all of your mortgage early, as reminded by the Bank of Portugal (BdP) this Tuesday, while explaining the applicable conditions.
“The customer can, at any time, repay part of their loan ahead of schedule and in the amount they deem appropriate. By doing so, the amount of installments to be paid until the end of the loan will decrease, along with the total amount of interest,” explained the banking supervisor.
Banks are required to accept early repayment, but according to BdP, you should be aware of the following:
- They may require the customer to make the repayment on the date scheduled for the monthly installment payment and that they be notified of this intention at least seven working days in advance;
- They may charge a commission for early repayment. For fixed-rate loans, the commission cannot exceed 2% of the reimbursed capital. For variable-rate loans, the commission cannot exceed 0.5% of the reimbursed capital.
“The repayment commissions refer to the maximum that can be charged, and do not apply if a lower commission or its waiver has been agreed upon in the contract. Repayment commissions cannot be charged if the reason for repayment is death, unemployment, or professional relocation of one of the loan holders,” the BdP noted.
The customer may also pay the entire loan ahead of schedule, says BdP, explaining that banks are required to accept total repayment, but this should also be considered:
- They may require the customer to make the repayment on the date scheduled for the monthly installment payment and that they be notified of this intention at least ten working days in advance;
- They may charge a commission for early repayment. For fixed-rate loans, the commission cannot exceed 2% of the reimbursed capital. For variable-rate loans, the commission cannot exceed 0.5% of the reimbursed capital;
- They may require the customer to pay expenses incurred on their behalf, in registries and notaries or tax expenses, but they must present documentary evidence of these expenses.
Important to know: “Until December 31, 2025, the customer is exempt from paying this commission on contracts for home acquisition or construction for primary residence with a variable interest rate“.
