Although the drop in Euribor has provided some financial relief, reducing your monthly mortgage payment through other measures can be a valuable boost to your household budget.
1. Review your current mortgage terms
First and foremost, it’s important to review all the terms of your mortgage, including the applicable interest rate, its index and spread, the loan term, and any financial products you may have contracted to lower the spread. All this information is crucial for reducing your mortgage payment and can be found in the European Standardized Information Sheet (FINE) that your bank provided when you took out the mortgage. If you don’t know where it is, ask your bank or check if it’s available in your online banking.
2. Make a partial mortgage repayment
Reducing your outstanding mortgage balance is an effective way to lower your monthly payment. If your mortgage has a variable interest rate, you should know that until the end of 2025, you are exempt from paying a fee for partial or full early repayment, which represents an additional saving.
However, to make an early repayment, you need to have some money available, which can be a challenge. Don’t be discouraged—if you have savings, do the math. Avoid using the amount set aside for your emergency fund (equivalent to 4–6 months of monthly expenses), but check the interest rate you are earning on any excess savings and compare it with the interest rate on your mortgage. The latter is likely higher, meaning you are losing money. In this case, it makes financial sense to use your savings to reduce your monthly mortgage payment.
3. Reach out to your bank to review your mortgage conditions
If you’re unable to make an early repayment, there are two ways to reduce your mortgage payment through your bank: extending the loan term or renegotiating the spread. Check if your bank is open to these options, and remember that you have a negotiation advantage—you are their client, and they don’t want to lose you to a competitor.
Extending the loan term
Negotiating a longer loan term can lower your monthly payment. However, be aware that, according to the rules of the Bank of Portugal, the loan term cannot extend beyond your 70th birthday (or even less, depending on your profile).
Renegotiating spread
If your mortgage has a variable interest rate, consider renegotiating the spread by subscribing to other financial products from the bank. However, carefully calculate whether the reduction in the spread outweighs the cost of these additional products.
4. Request offers from other financial institutions
Another alternative is to request offers from other banks. Don’t be surprised if they offer you a better deal than your current bank. Since mortgages are one of the most important financial products for banks, they are highly motivated to attract new customers. Many banks even offer special campaigns for mortgage transfers.
Compare the new offers with your current conditions. If you have a fixed-rate mortgage, check whether the new bank will cover the early repayment fee.
If you don’t want to switch banks, use these offers as leverage to negotiate better terms with your current bank.
Get in touch with Lead Kash
If you want to reduce your monthly mortgage payment, get in touch with us. Lead Kash handles the entire process for you and presents the best solution to achieve your goal. Best of all—this service is completely free for you. Contact us and let us simplify your life!
