Paying off part of your mortgage early in Portugal: DECO PROteste wants you, not the bank, to choose what happens
On 19 October 2026, the Portuguese consumer association DECO PROteste proposed that when you repay part of your mortgage early, you should decide: a lower monthly repayment or a shorter loan. Today, a shorter loan needs the bank's agreement. Here is what it means for you.
In this article
- 01How does early repayment work in Portugal?
- 02What is DECO PROteste proposing?
- 03Who decides today if your loan gets shorter?
- 04How much does it cost to repay early in 2026?
- 05Will the fee on variable-rate loans disappear?
- 06Should you wait for an exemption before repaying early?
- 07Lower repayment or shorter term: which saves more?
- 08What to do now
- 09Frequently asked questions
- 10Sources
If you have a mortgage in Portugal and some savings, you can use that money to pay back part of the loan early. A Portuguese consumer group now wants to change one rule in this process: who decides what happens to your loan afterwards.
How does early repayment work in Portugal?
You give the bank an extra amount to reduce the outstanding balance, which is the money you still owe. It can be part of the loan (partial early repayment, amortização parcial) or all of it at once.
After a partial early repayment, there are two options.
Lower repayment: the loan lasts the same number of years and you pay less each month. Shorter term: your monthly repayment stays the same and the loan ends sooner.
Both options cut the total interest you pay, because you owe less. But the saving is not the same, as the examples below show.
What is DECO PROteste proposing?
DECO PROteste, a Portuguese consumer association, made three proposals to lower the cost of mortgages, in a statement reported by Jornal Económico on 19 October 2026.
- Your choice after a partial repayment — the law would give you the right to choose a lower repayment or a shorter term, without the bank's agreement.
- Lower fees — no early repayment fee at all on variable-rate loans, and a fee of 0.5% instead of 2% on fixed-rate loans, including the fixed years of a mixed-rate loan.
- Interest in your tax return — let all homeowners deduct mortgage interest in their Portuguese income tax (IRS) again, whatever the date of the contract. The cap would be the same as for rent.
For now, these are only proposals. They change nothing until Parliament or the Government approves them.
Who decides today if your loan gets shorter?
Today, the bank does. By default, after a partial repayment your monthly repayment goes down and the term stays the same. A shorter term is a renegotiation of your contract and only happens if the bank agrees, according to Banco de Portugal, the country's central bank and regulator.
If the bank says no, you keep the lower repayment. DECO PROteste wants this choice to become your right by law.
Changing the term can have costs. Always ask for them in writing.
Before you decide, ask the bank for the new repayment, the new term and all the costs. This includes the early repayment fee, the 4% stamp duty (Imposto do Selo) on that fee and any fee for changing the contract.
How much does it cost to repay early in 2026?
In 2026, the bank can charge an early repayment fee for receiving the money ahead of time. The law sets a maximum, which depends on the type of rate in your contract.
| Type of rate | Maximum fee | On 5,000 € repaid |
|---|---|---|
| Variable rate | 0.5% | up to 25 € |
| Fixed rate | 2% | up to 100 € |
| Mixed rate, fixed-rate period | 2% | up to 100 € |
Maximum limits, calculated on the amount you repay, according to Banco de Portugal. The bank can charge less. Stamp duty is added to the fee.
There is no fee when you repay early because of the death, unemployment or work relocation of one of the borrowers, according to Banco de Portugal.
A mixed rate is fixed for the first years, then variable. In August 2026, 87% of new mortgages in Portugal had a mixed rate, according to Banco de Portugal data quoted by DECO PROteste. If you repay early in those first years, the fee can be up to 2%.
Will the fee on variable-rate loans disappear?
We do not know yet. From late 2022 to 31 December 2025, people with a variable rate on their main home paid no fee to repay early. Since 1 January 2026, banks can charge up to 0.5% again. In October 2026, there are three ideas on the table and none is in force.
| Who | What they want | Where it stands |
|---|---|---|
| DECO PROteste | No fee on variable rates, 0.5% on fixed rates | A proposal, in a statement on 19 October 2026 |
| Portuguese Parliament | A temporary exemption from the variable-rate fee and from stamp duty when you renegotiate | A recommendation to the Government, published on 19 October 2026 |
| Bill from the Chega party | No fee on variable rates | Passed its first vote on 30 September 2026 |
A recommendation from Parliament does not bind the Government. A bill that passed its first vote still needs more debate and a final vote before it becomes law.
Should you wait for an exemption before repaying early?
Almost never. At a 3% interest rate, each month of waiting costs you about 0.25% of the amount you want to repay. The maximum fee on a variable rate is 0.5%. After two months, waiting already costs more than the fee.
The result is the same for any amount. On 5,000 euros, each month costs you about 12.50 euros, against a fee of up to 25 euros.
A simple rule: divide 6 by your mortgage interest rate.
The result is the number of months it makes sense to wait for an exemption on a variable rate. At 3%, it is 2 months. At 4%, about a month and a half. In the fixed years of a mixed rate, the fee can be up to 2%: then divide 24 by the rate, about 8 months at 3%. None of the ideas in Parliament changes that fee.
FINOVA estimates. The rule assumes your money earns nothing while you wait. In a savings account, waiting costs a little less.
Lower repayment or shorter term: which saves more?
In most cases, a shorter term saves more interest, because you stop paying interest for the years you remove. A lower repayment gives you more room in your monthly budget.
One repayment of 5,000 euros
You owe 150,000 euros with 25 years left at a 3% interest rate. Your repayment is about 711 euros a month. You repay 5,000 euros early, once.
With a lower repayment, you pay about 688 euros a month, 24 euros less, and save about 2,100 euros in interest. With a shorter term, you keep paying 711 euros, finish about 1 year and 3 months sooner and save about 5,400 euros in interest.
5,000 euros every year
Many families repay a little once a year, for example with a Christmas bonus or savings. If you repay 5,000 euros at the end of each year, for up to 15 years:
| Lower repayment | Shorter term | |
|---|---|---|
| The loan ends | after 25 years | after about 14 years |
| Repayment from year 16 | about 215 € | already paid off |
| Interest saved | about 20,900 € | about 29,700 € |
| Fees paid (0.5%) | about 375 € | about 325 € |
FINOVA estimates for a variable-rate loan, with the rate staying at 3% for the whole term and a 0.5% fee on each repayment, with no insurance or stamp duty. In practice, Euribor moves and so do the numbers.
There is no right amount for everyone. The amount to repay is what is left after you keep savings for emergencies.
What to do now
- Check your type of rate and the fee. Your contract and the bank's price list show what early repayment costs you.
- Ask the bank for both simulations. One with a lower repayment and one with a shorter term, with all costs in writing.
- Tell the bank in advance. A partial repayment is made on the date a monthly repayment is due. The bank must receive your request at least seven working days before.
- Keep savings for emergencies. DECO PROteste advises repaying early only if your family still has a safety reserve.
- Compare with other options. Sometimes a better spread (the bank's margin), or remortgaging with another lender, saves more than repaying early.
Frequently asked questions
Can I repay my Portuguese mortgage early at any time?
Yes. You can make a partial repayment at any time, on the date a monthly repayment is due, with at least seven working days' notice. For a full repayment, the notice is ten working days.
There is no single answer for everyone. The best option depends on how much you still owe, the years left, your type of rate, the fee in your contract and the savings your family needs to keep.
FINOVA compares offers from several banks and reviews each case individually. FINOVA's fee is paid by the bank, after completion. The mortgage process itself always has costs of its own: taxes, the property valuation and registration fees.
Sources
DECO PROteste proposals and share of mixed-rate loans (August 2026): Jornal Económico (19 October 2026, in Portuguese).
Proposal on a shorter term after partial repayment: Jornal PT50 (20 October 2026, in Portuguese).
Recommendation to the Government on temporary exemptions: Diário da República — Parliament Resolution no. 264/2026, 19 October 2026 (in Portuguese).
The variable-rate exemption until the end of 2025 and the 2% cap in a fixed-rate period: Banco de Portugal — Bank Customer Portal (7 January 2025, in Portuguese).
First vote on the bill to remove the variable-rate fee: idealista/news (30 September 2026, in Portuguese).
4% stamp duty on fees (item 17.3.4): Stamp Duty General Table, Portal das Finanças (in Portuguese).
Notice period and date of a partial repayment, the maximum fee in 2026, exemptions and a shorter term as a renegotiation: Banco de Portugal — Bank Customer Portal (accessed 21 October 2026).
