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Home loans: Learn how to transfer to another bank

8 MÄRZ 2022
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Destaque Notícia Homepage Compra de Imóveis Comprar Casa em Portugal Crédito Habitação
If you have found a better option on your mortgage, it is possible to transfer to another bank. However, there are some precautions to take during the process.
Home loans: Learn how to transfer to another bank
Although a mortgage is a long-term commitment, no one has to be "stuck" with the same bank for decades. Throughout your contract you can compare offers and, if you find better conditions, you can transfer your mortgage at any time.

However, you should know that when you change your credit to another bank you will have to repeat the processes that preceded the first loan. In other words, you will have to run simulations, negotiate and understand which is the best option. In addition, you will have to provide documents that prove your income so that the credit institutions can assess your financial situation.

Also make sure that you have no pending problems at the Bank of Portugal's Central Credit Responsibility Center. In other words, that you are not on the so-called "black list". You can request your credit liabilities map through this site and confirm that there are no forgotten debts that might prevent you from taking out a new loan.


Transferring home loans: How and why
If you have searched, compared and realized that another bank's proposal allows you to save on your mortgage payment or has more favorable conditions, for example in terms of spread, it may be time to transfer your mortgage.

In this sense, learn how you should proceed and how much this process will cost you, according to an article by Santander.

In practice, what you do is pay off what you still owe to your current bank. This debt is paid by the bank to which you will transfer your credit. This operation is called early repayment.

Case study: Paulo has a credit of 150 000 euros with Bank 1, but he wants to transfer the credit to Bank 2. Bank 2 pays Bank 1 150,000 euros. From then on, Paulo's debt passes to Bank 2.

What are the costs?
Bank 1 is entitled to demand that you pay an early repayment fee. However, there are limits to the amount of this fee. It cannot exceed 0.5% of the principal repaid if it is a variable interest rate. If you have a fixed rate, the fee cannot be more than 2% of that capital.

When you transfer your mortgage, you may also have to pay Bank 1 for expenses that Bank 1 has incurred on your behalf, for example, for registry offices, notary offices or tax administration. Bank 1 may also ask for payment of the interest due until that date.

Bank 2, on the other hand, may charge you the dossier commission (related to the opening of the process), the property valuation commission, as well as the costs of the new deed. However, the new institution may choose to assume these charges, in full or in part. And, in this case, the client will not have to bear these costs, or will have to pay less, to change the home loan to another bank.

In this sense, before you decide to transfer your home loan, you should check with both credit institutions about the costs you may incur when closing one credit contract to open another.

Step by step to transfer your mortgage
Once you have all the conditions agreed with the bank to which you want to transfer the credit, you have to inform your current bank that you want to make this transfer.

After receiving the request, there is a period of 10 working days for Bank 1 to provide Bank 2 with the necessary information and details. The outstanding capital and the time period that has elapsed since the beginning of the contract are part of this information.

Once all the necessary information has been received, Bank 2 can proceed with the process. The customer must then repeat, in this contract, the steps already taken when he made the first credit. That is, gather and provide all the necessary documentation.

Required documents
Thus, he/she will have to deliver documentation related to the previous credit, such as the copy of the deed of purchase and sale and the multi-risk insurance and life insurance policies, in case he/she wants to keep these insurances with the previous insurer.

The Caderneta Predial (land registry) and the Certificado Predial (land registry certificate) are also necessary, as well as the floor plan of the property. To do the new deed you will also need a declaration of the capital in debt at bank 1 and the distrate, which is the document that proves the extinction or rescission of the mortgage of the property.

Precautions to take
Before changing your mortgage it is important to request simulations from several banks. Analyze well the conditions you have and compare them with those offered by other institutions.

The spread should not be the only factor to take into account. Often the advertised rates are only valid for a certain period.

In addition, there are other elements that influence the cost of credit. It is therefore essential that you compare the APR (the annual percentage rate of charge) and the MTIC (total amount charged to the consumer) of all offers.

You should also find out if there are any sales associated with the new loan (such as insurance or credit cards) that could increase your monthly expenses. If you are going to save on your mortgage, but have more expenses on other products, it may not be such an advantageous deal.

Also, find out what happens if, halfway through the new contract, you want to give up those products. Can the bank increase the spread?

Do the math to understand if it is worth it to keep the same interest rate or if it is worth it to change it. Also pay attention to the term of the new loan. If it is longer, the installment may be lower, but you will also have to pay more interest throughout the credit.
 
If you are having trouble paying off your current credit, try renegotiating the terms rather than simply looking to change banks. Problems may remain and transferring your credit to another institution will not solve them.

By transferring your home loan you are making a new commitment. So it is important to make sure that you have all the conditions in place for it to be fulfilled smoothly.

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Destaque Notícia Homepage Compra de Imóveis Comprar Casa em Portugal Crédito Habitação
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