Early repayment of a mortgage whether full or partial can represent an excellent opportunity to save, but the applicable conditions vary depending on the type of property and the agreed interest rate.
PRIMARY RESIDENCE – VARIABLE RATE
- Fee: 0% (temporary exemption until 31 December 2025)
- Legal Basis: Decree-Law No. 80-A/2022
- Applicable to: Variable rate contracts (e.g., indexed to Euribor) for primary residences
- Benefit: Allows partial or full repayment without paying a fee
- Advantage: Reduces the total interest paid and the term of the loan, with no additional costs
Insight:
If you have available savings, this is an ideal moment to reduce outstanding capital, taking full advantage of the fee exemption.
PRIMARY RESIDENCE – FIXED RATE
- Fee: Up to 2% of the repaid capital
- Applicable to: Fixed-rate contracts
- Rationale: The fee compensates the bank for lost future interest due to early repayment
- Advantage: Predictable repayments, but less flexibility to repay without cost
Insight:
Early repayment only makes financial sense if the interest savings exceed the 2% fee..
SECONDARY RESIDENCE OR INVESTMENT PROPERTY – VARIABLE RATE
- Fee: 0.5% of the repaid capital
- Applicable to: Variable rate loans for a second home or investment property
- Note: The 0% exemption does not apply to this type of mortgage
- Advantage: Reduced fee, though still a cost to consider
Insight:
Even with a 0.5% fee, early repayment can be advantageous for those wishing to reduce debt or exposure to interest rate fluctuations.
SECONDARY RESIDENCE OR INVESTMENT PROPERTY – FIXED RATE
- Fee: Up to 2% of the repaid capital
- Applicable to: Fixed-rate contracts for second homes or investment properties
- Advantage: Greater stability in repayments, but no exemption for early repayment
Insight:
In a declining interest rate environment, it may be more efficient to refinance or transfer the loan rather than repay with a fee.
COMPARATIVE SUMMARY – EARLY REPAYMENT CONDITIONS
| Property Type | Rate Type | Fee | Temporary Exemption | Valid Until |
| Primary Residence | Variable | 0% | Yes | 31 Dec 2025 |
| Primary Residence | Fixed | Up to 2% | No | — |
| Secondary Residence | Variable | 0.5% | No | — |
| Secondary Residence | Fixed | Up to 2% | No | — |
OPINION
For holders of variable-rate mortgages on primary residences, 2025 represents a unique opportunity to repay without costs.
Holders of fixed-rate mortgages or loans on secondary residences should carefully assess whether the potential savings outweigh the fee applied.
SUBLIME MORTGAGE |
|
 |
|
A Sublime Mortgage is a specialist advisory service offering a boutique, personalised approach. We provide expert, discreet guidance and work closely with leading Portuguese banks to secure competitive mortgage solutions tailored to your needs. We would be pleased to discuss your requirements. Contact us at +351 917 773 279 Email: info@sublimemortgage.com |
|
