How to Lower Your Mortgage Payment
If your monthly mortgage payment is putting pressure on your budget, there are several strategies you can use to reduce it. From renegotiating your current contract to transferring your loan to another bank, here is a complete guide to lowering your mortgage costs.
1. Review Your Current Contract
Start by understanding the details of your existing mortgage:
- Interest rate type: Is your rate fixed, variable, or mixed? If variable, check when the next Euribor review occurs.
- Current spread: Compare your spread with current market offers. If it is significantly higher, there is room for negotiation.
- Payment term: Extending the loan term reduces the monthly payment, although it increases the total interest paid over the life of the loan.
2. Transfer Your Mortgage to Another Bank
A mortgage transfer (also known as credit transfer) involves moving your loan to a different bank that offers better conditions. This is one of the most effective ways to reduce your monthly payment. Benefits include:
- Access to lower interest rates
- Possibility to renegotiate the loan term
- Opportunity to renegotiate associated insurance
3. Make Early Repayments
If you have savings available, making partial early repayments can significantly reduce your outstanding balance and, consequently, your monthly payment. For variable-rate loans, the maximum early repayment penalty is just 0.5% of the repaid amount.
4. Negotiate with Your Current Bank
Before transferring, approach your current bank with competing offers. Banks often prefer to retain customers and may match or improve upon rival proposals. Be prepared with specific figures and alternative offers to strengthen your negotiating position.
5. Review Associated Insurance
Life insurance and multi-risk insurance are significant ongoing costs. You have the legal right to contract these independently from the bank. Shopping around can yield savings of 30% to 50% on insurance premiums, which directly reduces your total monthly mortgage cost.
6. Government Support Programs
The Portuguese government periodically introduces support measures for mortgage holders, particularly during periods of rising interest rates. Stay informed about current programs that may offer temporary payment relief or subsidized conditions.
7. Debt Consolidation
If you have multiple loans (mortgage, car loan, personal credit), consolidating them into a single loan can reduce the overall monthly payment. However, this should be carefully analyzed as it typically extends the total repayment period.
At CAFIMO, we specialize in helping clients optimize their mortgage conditions. Whether through a credit transfer, renegotiation, or insurance review, we analyze your situation and find the best solution. Our service is 100% free.
Use our mortgage simulator, check the latest interest rates, or explore credit transfer options.
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