Mortgages
Everything that appears in a Portuguese mortgage offer: the rates, the index, the insurance, the ratios and the paperwork.
TAN (nominal annual rate)
The loan's interest rate, without fees or insurance. On a variable loan it is Euribor plus the spread.
It generates the interest in the instalment, but it is not the cost of the loan: it excludes fees, mandatory insurance and stamp duty.
Comparing offers on the TAN leads to the wrong choice. The legal measure for comparison is the APRC.
Spread
The margin the bank adds to the index. The only negotiable part of the rate.
In 2026 it typically sits between 0.75% and 1.60%, depending on loan-to-value, the relationship with the bank and bundled products.
A low spread with three mandatory products (insurance, card, salary transfer) can cost more than a high one with none. What compares is the APRC.
Euribor
The rate at which European banks lend to each other. The index behind almost every Portuguese mortgage.
Published daily for several maturities. Portugal mostly uses 3, 6 and 12 months, and the maturity chosen sets how often the instalment is revised.
A shorter maturity tracks the market faster. Better when rates fall, worse when they rise.
Fixed rate
Interest that does not move for the contracted period. Costs more at the start and removes the risk of rises.
It can be fixed for the whole term or for an initial period. In Portugal the common shapes are fixed for 2, 5 or 10 years, then variable.
Leaving early costs more: early repayment on a fixed-rate loan is capped at 2% of capital, against 0.5% on a variable one.
Mixed rate
Fixed for the first years, variable after. The compromise most new contracts end up taking.
It removes the risk in the period when the budget is tightest and the outstanding capital largest, and hands it back later when both have eased.
Read what happens when the fixed period ends: the spread for the variable phase is in the contract and is not always the one advertised.
Principal repayment
Paying down capital. In an instalment it is the part that is not interest; as an early repayment, it is capital paid outside the schedule.
Early repayment earns exactly the loan's rate, tax-free and risk-free. An alternative investment has to beat that rate after tax to be worth it.
You can shorten the term or lower the instalment. Shortening saves more interest overall; lowering improves monthly cashflow and the debt-service ratio.
Interest-only period
A period paying interest only. The instalment falls, the outstanding capital does not.
Mostly used at the start to ease the budget. When it ends the instalment rises, and over a shorter remaining term, so it rises more than the original arithmetic suggested.
The total cost of the loan always increases: interest keeps accruing on capital that was not repaid.
ESIS (European Standardised Information Sheet)
The document setting out every condition of the loan, in the same format across the European Union.
It carries the nominal rate, the APRC, the total cost, the instalments, the fees, the required insurance and the effect of rate changes. It is issued before signing and has a minimum validity.
It is what lets you compare offers from different banks without depending on what each simulator chooses to show.
Bank valuation
The surveyor's estimate for the lender. If it comes in under the price, the loan is measured against it.
It typically costs a few hundred euros, paid by the borrower, who receives the report. The surveyor is independent of the bank and registered with the securities regulator.
A valuation below the price does not stop the purchase: it forces a larger deposit, because the loan-to-value ratio is measured on the valuation.
Mortgage life insurance
Cover the bank requires to secure the outstanding capital. Not required by law. Required by the contract.
The premium rises with age and with the sum insured, and can be a significant share of the loan's cost over the term.
You do not have to buy it from the lender: the law allows an equivalent policy from another insurer, and the bank cannot raise the spread because of it.
Remortgaging
Moving the loan to another bank. Worth it when the saving over the remaining term beats the cost of moving.
Costs: a new valuation, registering the new charge, discharging the old one, and any early repayment fee. 0.5% on variable, 2% on fixed.
Formally requesting the discharge is the most effective way to negotiate: losing a secured loan with a good payment history is expensive for the current bank, which often matches the offer.
Debt-service ratio (taxa de esforço)
The share of net income going to loan payments. Banco de Portugal limit: 45%, with a rate shock.
The bank doesn't use today's rate: it adds +0.5 points (term ≤5 years), +1 (5 a 10) or +1.5 (>10) and tests the resulting payment. If the loan ends after age 70, income counts at 80%.
Banks may exceed the limit on 10% of new loans per half-year. Don't count on it.
LTV (loan-to-value)
Loan divided by property value. Maximum 90% for a primary home, 80% for investment. On the lower of price and valuation.
Investors get 80%: a buy-to-let loan isn't a primary-home loan. If the bank's valuation comes in below the price, LTV is measured on the valuation.
Maximum term: 40 years up to age 35, 35 years after.
TAEG (APRC) and MTIC
The two legal measures for comparing loans: total yearly cost in % and total cost in euros.
The APRC includes interest, fees, mandatory insurance and stamp duty. Not just Euribor plus spread. MTIC is the sum of everything you pay.
On a non-primary-home loan the 4% stamp duty on interest should be in both. Bank simulations don't always include it.
The other groups
General information based on current legislation. Not tax or legal advice.