Can I request renegotiation of my housing credit?

Can I request renegotiation of my housing credit?

The renegotiation of the conditions of a mortgage can be a solution for those seeking a lower installment. Find out how renegotiating a loan works and learn about the exception to the rule for 2023.

11 Aug 20234 min

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Need help contacting the bank to renegotiate your housing credit? Credit intermediaries Poupança no Minuto can help you with negotiating the terms, handling all the paperwork. For more information on renegotiating housing credit, let us explain.

How to request the renegotiation of my housing credit?

If you realize that you do not have the financial capacity to meet the monthly payments of your home loan, or need relief in your monthly budget, you can request a renegotiation of the contract.

With the rise of Euribor, and the consequent increase in installments of variable rate loans, many Portuguese have found it difficult to stay on track. Renegotiating the credit terms can help achieve savings on this burden.

The first step to request a renegotiation of the home loan is to contact your bank, which offers solutions to lower your debt-to-income ratio.

What new conditions can they propose to me?

The bank evaluates each case individually, so it can find housing credit conditions that help lower payments. But it can propose conditions such as:

  • A bonus on the spread, in exchange for subscribing to other credit-related products;
  • The extension of the financing period, with the option to always return to the originally contracted deadline;
  • A capital grace period, where only interest is charged;
  • And a capital deferral, postponing a portion of the debt until the end of the contract.

Relationship between spread and cost

You must note that, in order to lower your spread, the bank usually makes a counteroffer for you to hire other associated products, such as a credit card.

In other words, to access a bonus on the spread, you may have to submit to other credit conditions.

To understand if it's worth it, always do the math beforehand. For example, if you have the required insurance for the credit in an insurer other than the bank's, and the bank asks you to transfer the insurance to their company in exchange for a decrease in the spread, be aware that it may not be worthwhile.

The savings you make with a lower insurance premium can be greater than what you would earn with a lower spread.

So, when it comes to reducing the spread, you should always pay attention to what the bank asks for in return.

New measure forces banks to renegotiate contracts.

In 2023, an exceptional measure is in force for credit contracts intended for own and permanent housing, with a variable interest rate and an outstanding amount of up to 300,000 euros.

The measure requires that, whenever there is a significant increase in the effort rate up to 36% in these credit contracts, due to the rise of the Euribor, banks must renegotiate the conditions. In order to lower the effort rate, banking institutions have to make a new proposal to their respective clients.

During this measure, customers can also renegotiate credit conditions with:

  • An effort rate equal to or greater than 36%, with a 5% increase in the last year;
  • Effort rate equal to or higher than 36%, with an increase greater than 3% in the associated interest rate;
  • An effort rate equal to or greater than 36% in the latest installment update;
  • All those who already have an effort rate equal to or greater than 50%.

In order to confirm the current effort rate of a credit holder, the bank may require the latest IRS statement from the household. In this sense, customers must submit the statement within 10 days.

Am I obliged to accept the bank's renegotiation?

You are not required to accept the bank's renegotiation proposed within the exceptional measure explained above. However, you must ensure that you continue to comply with the monthly payment of your home loan installments.

And if you accept the renegotiation proposal, you cannot be charged commissions or an increase in the interest rate.

You should know that, by accepting the bank's renegotiation, it will be recorded in the credit responsibilities central of the Bank of Portugal as a credit at risk of default. In other words, if you need to take out a new credit again, any bank will know and may consider you a risky customer.

If you want to renegotiate the conditions of your home loan, you can use a credit intermediary Poupança no Minuto. They mediate between you and the bank, helping negotiate the best conditions and handling all the bureaucracy, for free.

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