Portugal Extends Mortgage Break: No Fees for Early Payments in 2025, But Not for Everyone
Homeowners with variable-rate mortgages in Portugal get another year without early repayment penalties.
Portugal's Parliament has approved an extension of the temporary rule that prevents banks from charging fees on early mortgage repayments for those with variable-rate loans. The measure, initially introduced in 2022 to help families cope with rising interest rates and inflation, has been prolonged for another year. The Socialist Party (PS) proposed this extension, which was passed by the Budget and Finance Committee, with the PSD abstaining and Chega voting against.
This means that throughout 2025, families with variable-rate mortgages will not face penalties when making extra payments on their home loans. The original measure, set to expire at the end of 2023, was previously extended to the end of 2024. The PS initially tried to make this ban on fees a permanent measure in the 2025 budget, but that attempt was rejected. Now, they've pushed through this one-year extension.
The Socialist Party's justification for the extension points to the continued financial strain on Portuguese families, even with recent decreases in Euribor rates. They believe allowing people to make early payments without added costs remains an important tool to reduce financial pressures. "Even though Euribor rates have recently decreased, affecting loan payments, housing credit costs still heavily impact family budgets," stated the proposal's explanatory note. "In this context, the option to make early repayments, either fully or partially, continues to be important to ease the costs associated with credit."
While the PS would have preferred a more permanent solution, with no fees for early repayments on variable-rate mortgages and a maximum fee of 0.5% for fixed-rate mortgages, that plan is on hold. For now, the current system, which only benefits variable-rate mortgage holders, will continue through 2025.
This decision is a relief for many Portuguese homeowners, but it also highlights the ongoing debate over financial protections for consumers. The differing stances of political parties, with the PSD abstaining and Chega outright opposing, show that there are various opinions about how best to support families struggling with housing costs. Homeowners should take advantage of this opportunity to reduce their debt without incurring penalties, if possible.
Key takeaways:
The ban on early repayment fees for variable-rate mortgages is extended to 2025.
This measure aims to help families handle housing costs despite recent decreases in Euribor rates.
The Socialist Party tried to make the ban permanent but faced political opposition.
Homeowners with fixed-rate mortgages do not benefit from this extension.
Sources:
Lança, F. (2024, December 18). Reembolso antecipado do crédito à habitação continua sem penalizações em 2025. Jornal de Negócios.