Do you want to renegotiate your loans? What you should know before making decisions
Renegotiating credit can be an essential tool for balancing the family budget – whether it’s home credit, personal credit, car credit or credit cards. But beware: there are several ways to do it, and each one has different implications, which should be carefully assessed.
1. Start by making a financial diagnosis
Before contacting any bank or credit intermediary, analyze your current financial situation:
List all household incomes;
- Identify all fixed and variable expenses;
- Check your effort rate (the percentage of your monthly income that goes towards paying off loans);
- Get the Credit Liabilities Map on the Banco de Portugal website (it’s free and updated monthly).
This diagnosis is fundamental to understanding whether renegotiation will be beneficial and how it should be carried out.
2. Renegotiating while everything is fine is the best strategy
It’s common to only seek financial support in times of difficulty. However, it is best to renegotiate when you are still financially stable – with a regular income and no late payments. At this stage, you will have greater negotiating power with the institutions and will be able to improve conditions without pressure.
Remember: the decisions you make today can have an impact for 10, 20 or 30 years, especially with home loans. Carefully evaluate the terms, rates and associated charges.
Here are 3 ways to renegotiate your credit:
a) Review the conditions of your current loan with your bank
You can request changes such as:
Spread reduction;
- Change of rate (variable, fixed or mixed);
- Extended payment period;
- Grace periods (capital or interest);
- Change of index (for example, from 6-month Euribor to 12-month Euribor).
As a rule, these changes don’t involve any costs or the need to sign up for new banking products. But they should be analyzed carefully: a longer term reduces the installment, but increases the total cost of the loan.
b) Transfer of credit to another institution
If you find better conditions at another entity (such as a lower APR), you can transfer your credit.
The main advantages:
- Negotiate a lower monthly payment;
- Get more competitive spreads and insurance;
- Possibility of contracting with new terms and rates.
- If you don’t have any arrears, this transfer is usually free of charge and in many cases the new bank will cover the costs of moving.
If you have several loans (personal, car, cards), you can combine them all into one:
- A single monthly payment;
- A lower interest rate;
- A longer deadline.
It’s a solution that relieves the budget in the short term, but can represent an increase in the total cost over the years. It should be analyzed carefully, especially the MTIC (Total Amount Charged to the Consumer).
At DS Intermediários de Crédito, we analyze your case personally and free of charge. We compare offers, explain the long-term impacts and monitor the entire process with the bank.