How does the housing credit transfer work?

Want to advance with a mortgage transfer right now? Credit intermediaries Poupança no Minuto can help you directly, for free, quickly, and assertively. To learn more about how the whole process works, we clarify all the questions below.

Can I transfer my housing credit at any time?

Yes, it is possible to transfer your home loan at any time during the contract. Typically, there are no clauses in the contracts that limit the borrower from being able to transfer their credit to another bank entity.

However, if they decide to proceed with the transfer, the credit holders must inform the bank where they have the contracted credit 10 days in advance. From there, the bank also has 10 days to submit the respective data and documents related to the credit to the bank where the process will be transferred.

How to transfer my mortgage credit to another bank?  

If you are not satisfied with the conditions of your mortgage, the first step is to contact the bank. In order to renegotiate your credit, the bank may make a new proposal with more beneficial conditions.

For example, in order to lower the loan spread, the banking entity may propose that you hire financial products, such as a credit card.

But if you are still unsatisfied with the conditions offered by the current bank and want to save more on the installments you pay for credit, consider transferring.  

To proceed with a housing credit transfer, contact other banks so they can present you with different proposals, according to the specifics of the credit and your preferences.  

Then, you should evaluate and compare which of the proposals will be more compensatory (if any), considering the conditions you currently have.

What are the advantages?

The advantages will depend on each case. However, as a rule, transferring credit allows you to pay fewer monthly installments, through:

• Reduction of spread, and consequently the Annual Nominal Rate (TAN);  
• Extension of the contract deadline.
• Change in interest rate modality.
• Lower the amounts you pay for required insurance policies.
• With a new evaluation, the market value of the house can increase.

What are the costs of transferring a housing credit?

Before proceeding with the transfer of your housing credit to a new bank, you should also take into consideration if the process has costs.

The process can have costs, yes. Both the current bank and the bank you are transferring the contract to may have fees.  

Firstly, in the bank where you have the housing credit you may have to pay a commission for early repayment. This early repayment commission represents 0.5% of the capital repaid in contracts with a variable interest rate (0.25% if the contract is in the final year), and 2% in contracts with a fixed interest rate.

Afterwards, at the bank to which you will transfer, you may have costs with bank fees such as processing or evaluation fees, and with a new deed. However, most banks cover these expenses.

How does credit transfer between banks work?  

To move forward with the credit transfer process, as mentioned above, you must notify the current bank with a 10-day advance notice of your intention. Then, if the banks have APB protocol, the mortgage cancellation process can be simple.

The APB protocol is an agreement among most banks, which in this case allows cancelling a mortgage at one bank in order to transfer it to another. To do this, the borrower must go to the bank where the mortgage is held to obtain the Authorization Term, signed and stamped. Then, the borrower must deliver this Term to the bank to which they will transfer.

This is so that the bank receiving the mortgage can request the other bank to cancel it, from the day a new deed will be signed. The current bank must send the SWIFT code to the bank that will receive the mortgage, with electronic consultation of the mortgage cancellation term, for the deed to be carried out. It is in this process that the banks communicate the outstanding amount.

About this protocol, it should be noted that: there are banks that have not adhered, and others that only accept the cancellation of mortgages through this process.

Note that the bank to which you want to transfer requires the same documents that you had to present to the first bank. This is to prove your income, tax and professional situation, in order to ensure your financial capacity. It is also necessary to submit documentation related to the property.

Just like the first bank, this entity will consult the Credit Responsibilities Central of the Bank of Portugal to check your tax history, if you have debts or non-compliance with installments.

Therefore, to ensure that the credit transfer is approved, try to settle any debt that may be pending.

How to choose the best proposal to transfer my credit?

To choose the best home loan proposal, consider your preferences. What is the impact of having lower monthly installments?

For example, at this time, in most cases, contracts with a variable rate indexed to the Euribor pay more interest than contracts with a fixed rate, due to the rise in interest rates. However, it is important to reinforce that, once interest rates start to decline again, by switching to a fixed rate, you will end up paying more than if you had kept the variable rate. Or, if you extend the contract term, you will also pay less immediately, but this implies paying more interest over the total credit.

This is to explain that there are conditions that may propose to you that will decrease your monthly credit installment in the short term, but in the long term the tables can turn and you end up paying more for credit.

After considering these questions, to compare proposals between banks, look at the Annual Effective Global Charge Rate (TAN). The TAN represents the total cost of credit, including all charges, from insurance, taxes, to others associated. If the proposal is for the same term, outstanding amount, and repayment method in various banks, the lower APR will correspond to the cheapest proposal.

If you need help comparing proposals, understanding the new conditions and their impact on the amount you will pay, turn to a credit intermediary Poupança no Minuto. With a free service, they are available to clarify all your doubts, deal with bureaucracy and mediate with banks.