finanças
How to remortgage in Portugal and manage your home loan wisely
Whether you’re looking to cut costs, secure a better rate, or unlock extra funds, understanding how to remortgage your property can help you make smarter financial decisions.
Owning a home comes with financial responsibilities, and managing your mortgage effectively can lead to significant savings and long-term stability. If you’re aiming to reduce monthly payments, secure a better interest rate, or access additional financing, there are two main strategies to consider in Portugal: switching your mortgage to another bank or remortgage with new terms.
We’ll discuss the differences, benefits, and how to make the best choice for your financial goals.
Remortgage vs. switching lenders: what’s the best option?
What does it mean to transfer your mortgage?
Switching your mortgage - often called a mortgage transfer - involves moving your current home loan from one bank to another. This is usually done to benefit from better interest rates, lower fees, or improved terms, all while keeping the loan amount unchanged. In Portugal, some banks even offer to cover transfer-related costs as part of promotional campaigns.
Key benefits of transferring your mortgage:
- Lower interest rates: a better rate can significantly reduce your monthly payments
- Improved terms: banks may offer lower spreads, reduced fees, or more favorable insurance options
- No new borrowing: the outstanding loan remains the same—only the lender changes.
What is a remortgage?
Remortgaging means replacing your existing mortgage with a new one—either from the same bank or a new lender. This strategy allows you to adjust loan terms, extend or shorten the repayment period, or release equity built up in your property.
Top reasons to consider a remortgage:
- Lower monthly payments: if interest rates have dropped, a new loan can reduce your financial burden
- Access to home equity: borrow more against the current value of your property to fund renovations, investments, or other needs
- Flexible terms: you can switch from a variable-rate to a fixed-rate mortgage or adjust the loan duration for better stability.
Key differences and implications
| Feature | Mortgage transfer | Remortgage |
|---|---|---|
| Lender | A new lender is always involved | Can involve the same or a different lender |
| Modifies loan amount | No | Yes |
| Primary purpose | Get a better interest rate or loan conditions | Adjust loan terms or access equity |
| Costs | May include early repayment fees (sometimes covered by the new bank) | May include valuation, legal, and registration fees |
| Risk level | Low | Moderate, depending on new terms |
Bottom line: if you simply want to reduce your mortgage payments without increasing your debt, switching your mortgage may be the right move. But if you need extra funds or want to restructure your loan more significantly, remortgage might be the better choice.
Smart strategies for managing your mortgage
1. Compare offers: whether switching or remortgaging, always shop around for the most favorable terms
2. Evaluate total costs: look beyond the interest rate. Consider insurance, fees, loan term, and additional products
3. Negotiate with your current lender: use better offers from other banks to your advantage - they may match or beat them
4. Choose the right timing: the earlier in your mortgage term you act, the more you can save
5. Understand the details: some mortgage contracts include clauses that limit your ability to transfer or remortgage.
Required processes and documentation
To transfer or remortgage your loan in Portugal, you’ll typically need:
- Proof of income: Recent pay slips and IRS returns
- Bank statements: Usually for the last 3 to 6 months
- Current mortgage details: balance, interest rate, and repayment schedule
- Property valuation: a new appraisal may be required by the new lender
- Identification documents: valid ID and proof of residency if applicable
Quick note: switching usually takes a few weeks, while remortgaging may take slightly longer depending on the lender’s assessment and documentation process.
Practical case studies and real-life examples
Case study 1: mortgage switch to save on interest
João had been paying a 4% interest rate on his mortgage for five years. After noticing lower rates on the market, he began exploring other options. He found a new lender offering 3.2%, no transfer fees, and a lower spread.
By switching, he cut €150 off his monthly payments, saving €1,800 annually. His new lender also offered insurance discounts, leading to further savings. The process was smooth and completed within a month.
Lesson: switching your mortgage can be a quick and effective way to lower your payments without increasing your loan.
Case study 2: using a remortgage to finance home improvements
Ana and Miguel had lived in their home for eight years and wanted to renovate their kitchen and bathroom, but didn’t have the savings to fund it. Rather than taking out a high-interest personal loan, they decided to remortgage.
Their original loan had 22 years left at 3.5%. By remortgaging, they:
- Increased their loan amount by €30,000
- Lowered their rate to 2.8%, reducing interest costs
- Extended their loan term by five years to keep monthly payments manageable.
Their new monthly payment only increased by €75, allowing them to proceed with renovations without financial strain.
Lesson: Remortgaging can unlock equity in your home and give you financial flexibility to tackle bigger projects.
Not sure where to start? A mortgage simulator can help you estimate your monthly payments, compare scenarios, and understand how remortgaging or switching your loan could impact your finances - so you can make an informed decision with confidence.
The information provided isn’t a substitute for consulting public or private experts in each area.
