Portugal Scraps Loan-Processing Fees on Pre-2021 Mortgages and Makes Tied Products Optional From 28 June

A piece of Portuguese consumer-credit law that has been switching on in stages since the start of the decade reaches its final phase on 28 June 2026. From that date, banks can no longer charge the monthly comissão de processamento (loan-instalment processing fee) on credit contracts signed up to 31 December 2020 — the last tranche of borrowers still paying it. They are also barred from making a credit renegotiation conditional on buying insurance or other products, and they must show customers exactly what each spread discount is worth.

For households carrying older mortgages, it is a small but real recurring saving; for anyone renegotiating a loan in a year of shifting Euribor, it removes a familiar piece of arm-twisting. None of it is dramatic on its own, but together the changes tighten the screws on the fee-and-bundle model that Portuguese retail banking has leaned on for years.

The processing fee finally disappears

The comissão de processamento is the charge a bank adds each month simply for collecting your loan instalment — a fee critics long argued bills you for the privilege of paying. Portugal already abolished it for credit contracts signed from 1 January 2021 onwards in an earlier phase of the same law. What changes now is that the ban extends backwards to cover every contract signed up to the end of 2020, closing the last gap. If you took out a crédito habitação (home loan) or a personal loan before 2021 and have been watching a few euros leave your account every month under that label, it should now stop.

No more bundling on renegotiations

The second change targets the moment many borrowers feel most cornered: renegotiating a loan. Until now, a bank could effectively dangle a better rate in exchange for taking out its life insurance, home insurance, a credit card or some other product. From 28 June, buying those associated products becomes strictly optional in a renegotiation — the bank cannot tie the new terms to them. The rule does not stop banks from offering bundles; it stops them from forcing one as the price of a renegotiation.

There is also a quieter fix for borrowers in trouble. When several credit contracts are backed by the same guarantee and the borrower defaults, the bank will now be able to charge only the commission linked to the first default, rather than stacking a separate penalty on each contract.

Putting a price on the spread discount

The most useful change for shoppers may be the new transparency rule on the spread — the bank's profit margin added on top of the index rate. When a lender offers to shave the spread in return for buying extra products, it must now hand the customer a payment simulation for each discount item, showing the difference between the spread base (base spread, with no products) and the spread contratado (the contracted spread you would actually pay with the products bundled in). That has to be provided both when the credit is signed and, later, whenever the customer asks for it.

In practice it lets you see, line by line, whether the insurance policy a bank is pushing actually pays for itself in a lower rate — or whether you would be better off keeping the higher spread and shopping the insurance elsewhere. It dovetails with the Bank of Portugal's broader overhaul of fee disclosure, after the supervisor opened a multi-year reformulation of the comissões leaflet and its fee comparator earlier this year.

Why it lands now

The timing matters because Portuguese mortgage costs have been moving again. The 12-month Euribor that most loans track has been drifting, and the typical monthly instalment has been ticking up at the annual reset. When the headline rate is rising, the fees and bundled products stapled around it become exactly where a careful borrower can claw money back — which is what these rules are designed to make easier.

What This Means for Expats

• Older-mortgage holders: if you bought property in Portugal and signed the loan before 2021, check your statements from July onward — the monthly processing fee should be gone. Query it with your bank if it is still there.
• Anyone renegotiating: with rates moving, renegotiating is back on the table. You no longer have to accept the bank's insurance or card to get a better deal, so negotiate the rate and the products separately.
• Compare the real cost of a bundle: ask for the spread-base-versus-contracted-spread simulation in writing. It is now your right, and it is the cleanest way to tell whether a "discount" for taking the bank's insurance is genuine.
• Insurance is portable: Portuguese law already lets you hold the mandatory life and home insurance on a mortgage with an outside insurer. These rules reinforce that you should price it independently rather than default to the bank's offer.

None of this rewrites Portuguese banking overnight. But for the large cohort of residents — many of them foreign buyers — still servicing pre-2021 loans, 28 June quietly removes a recurring charge and hands them a sharper tool for the next time a bank offers a deal that comes with strings attached.