Did you know you can change the terms of your mortgage if your bank agrees? The Bank of Portugal (BdP) highlights this in the latest episode of the podcast ‘#ficaadica’.
“You can do this at any time, but only if the bank agrees. If no agreement is reached, you always have the option to transfer the loan to a bank offering the conditions you seek. Learn more about renegotiating mortgage terms in this episode of ‘Fica a dica, o podcast do cliente bancário’,” states the banking supervisor’s release.
The BdP podcast “raises awareness of the activities carried out by the Bank of Portugal and covers topics that can be useful in the daily lives of citizens, such as tips for using financial and payment services or information about services available to individuals and businesses.”
Want to change your mortgage terms? Here are four rules you need to know
For those who wish to change their loan conditions, consider these four points:
1. “You can renegotiate your loan terms at any time. However, changing conditions is only possible if the credit institution agrees.”
You can renegotiate:
- the spread;
- the index term (e.g., from Euribor 6 months to Euribor 12 months);
- the interest rate regime (from variable to fixed or vice-versa);
- the loan term;
- the repayment method (such as deferring part of the principal).
However, these changes can only occur if the credit institution agrees, and they cannot alter the loan conditions without the customer’s agreement.”
2. “If the credit institution agrees to change the loan conditions, it cannot charge any commission for this change.” It also cannot require customers to purchase other products or financial services in exchange.”
3. “If renegotiation is prompted by a change in contract holders — due to divorce, legal separation, dissolution of a common-law union, or the death of a spouse — and the new holder is experiencing financial difficulties, the credit institution cannot increase the spread,” provided it concerns a loan for primary residence. If this applies, check the relevant requirements.”
4. If the credit institution does not accept changing the loan conditions, customers can always seek better terms from another institution and, if desired, transfer the loan.
“Remember, however, that transferring a loan to another bank incurs costs.
For example, you may need to pay the originating credit institution:
- An early repayment fee, which can be up to 0.5% of the repaid capital for variable interest rate contracts or up to 2% for fixed-rate contracts. Until December 31, 2025, customers are exempt from this fee on home loans for primary residence acquisition or construction with variable interest rates;
- Possible expenses paid on the customer’s behalf to registries, notaries, or tax authorities;
- Interest due up to the early repayment date.
You may also need to pay the institution receiving the loan for costs related to setting up the new loan.
Consider whether the offered conditions justify the transfer costs.”
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