The Government will oblige banks to renegotiate mortgage loans whenever the customer’s effort rate is equal to or greater than 36%. This you already know and have read in great detail. The question I want to raise is: are you obliged to accept the bank’s proposal or do you have better alternatives?
What is the effort rate?
First of all, I just want to remind you how to calculate the effort rate, in case you don’t know and are curious to know what yours is: just divide the sum of all your credits (even if some are from other banks – such as car, personal or credit cards) your family’s net income (excluding food allowance). The value you give is your effort rate. It is the official measure of the banks to know if you have the potential to be a good paying customer or if you are “exaggerating” in credits and, probably, one day later, you will have difficulty paying what they agreed. Usually, if your effort rate is above 35%, they will usually give you a higher spread to cover default risk. ideal is for your effort rate to always be less than 35% to have room for maneuver in case of climbs like this. The problem is that, with inflation, everything increased at the same time. The money he should have left over every month to accommodate the increase in the house payment is also being diverted to the other increases. The current scenario has everything to go wrong. So, you already know that you should expect a contact from your bank there for January if your effort rate exceeds 36%. Read also: Recent housing loan: Can I improve conditions?
I was contacted by the bank: What to do?
For now – if you don’t have financial difficulties – should be anything but offended🇧🇷 The bank will only be complying with what the law says. He has to contact you to see if his finances are all right. Then your answer might be “Thank you very much, but I’m not interested”. And go on with your life and save time at the bank. On the other hand, if you already have difficulty paying the new installment, or expect that you will, my suggestion is not to wait for the bank’s contact🇧🇷 You must act now, looking for an alternative that is better for you and that does not involve restructuring your credit. What does that mean? It’s that if the bank offers you an increase in term, or a deferral of capital or capital shortage, most likely not only will you pay more in interest at the end, but you may end up on the so-called “black list” of the Bank of Portugal despite not having stopped paying the installments to the bank. There is a kind of “orange” list that marks customers as at risk for new loans in the future. I confess that it is strange that some people are very offended by being considered risky customers for renegotiating mortgage loans. But let’s be honest, if you need to renegotiate your credit to be able to continue paying the installments, it’s because somehow – consciously or not – you miscalculated the situations that could arise. It is because in the origin, it accepted conditions beyond its possibilities in the face of the worst scenarios. I remind you (I know you won’t enjoy reading this) that the values you have or will have in the coming months are the “normal” values🇧🇷 Euribor is usually around 2%. Having seven years of negative Euribor was never normal. This had to end one day. It was enough to return to “normality”, albeit for bad reasons (war and inflation), to realize that many families did not foresee such a rapid rise and now they will need help. two earn 1,000 euros net, the effort rate only reaches 36% if the installment reaches 720 euros. If you do not reach this amount, the bank will not be obliged to renegotiate with you. And Euribor continues to rise non-stop. It will definitely reach 3% and, according to some experts, perhaps at 4%. This will be a tragedy, especially for families who took out loans last year or in the last four or five years, when Euribor was negative and installments were very low. Many thought those values would last forever. Also read: What is a home loan transfer?
Anticipate and propose solutions
So, in short, take the initiative🇧🇷 Ideally, contact your bank and try to lower the spread, but keeping to the deadline, (try 1% or less) or simply transfer credit to another bank with better conditions (this does not affect you with the Bank of Portugal), provided that the bank bears all expenses. Consider making a mixed or fixed rate. It can be a good option at this stage, even knowing that you may pay more than if you keep the variable rate. Some banks are fixing the current Euribor value for four or five years and then add the difference at the end of the period. until the end of the contract. This can be a good proposition for the most afflicted. They won’t really save anything., but block increases for the next two years. It could be a solution. Evaluate. In summary: if the bank contacts you, you are not obliged to accept the bank’s initial proposal🇧🇷 Also present alternatives: look for intermediate solutions such as deferral of capital (paying a larger share in the last installment), capital shortage, increasing the term, refinancing, lowering the spread by accepting products or services you need, etc. Banks have no interest in a customer failing a payment. Use this to your advantage. Don’t even think you’ll be able to go back to last year’s old installments (2021). This will not happen. At most, the installment will go down a little in relation to what you currently pay or what you will pay from the next review. We have to be realistic. The time for low installments is over.Rebuild your monthly budget with this in mind🇧🇷 Amortize early if you have stagnant savings. Until inflation starts to come down, it’s going to be tough times. But don’t give up trying to find solutions. If the solution presented by the bank is “less bad”, accept🇧🇷 It’s better than going into default. 
Pedro Andersson was born in 1973 and fell in love with journalism as a teenager, at Rádio Clube da Covilhã. He graduated in Social Communication at the University of Beira Interior and began his professional career at TSF. In 2000, he was invited to be one of the founding journalists of SIC Notícias. Currently, he continues at SIC, as a coordinating journalist, and since 2011 he has been responsible for the “Savings Accounts” section, dedicated to personal finance. He tries to bring the reality of everyday life to the reports he makes.