Redeem PPR to pay off mortgage? Find out how at:
Do you have a Retirement Savings Plan (PPR) and want to withdraw funds early to pay off your mortgage? This is a process you can go through, but with certain conditions.
Need to save on your home loan? Let's look at all the available solutions: Contact the credit intermediaries of Poupança no Minuto. Or understand how the option of redeeming PPR to amortize the loan works.
Tax Authority explains conditions for redeeming PPR.
According to a post shared on social media, the Tax and Customs Authority (AT) states there are two conditions to be able to withdraw funds from your PPR in advance in order to pay off part or all of your home loan.
According to AT's publication, consumers have until the end of December 2023 to be able to "benefit from the exception regime that allows them to anticipate the redemption of PPR amounts - retirement savings plan - to amortize home credit".
However, when it comes to authority, they can only do it for the purpose of applying to the housing credit if:
- Loans for the acquisition or construction of permanent housing are made in the name of the PPR holder.
- The limit for the amount to be redeemed corresponds to up to 12 times the value of the Social Support Index (IAS), i.e. 5,765.16 euros (12x480.43).
Redeeming from PPR to pay off mortgage loan in 2023
The redemption of PPR for partial or total amortization of housing credit is a measure in force until the end of 2023, Law No. 19/2022, of October 21 by the Government.
The measure now allows mortgage borrowers, participants in PPR, to be reimbursed without any penalty. This is up to a maximum of the value of the IAS in 2023, which is 480.43 euros per month.
Through this legislation, you can also subscribe to a PPR until December and still benefit from tax benefits, and withdraw your money monthly with the IAS limit.
And you can perform this procedure without having to repay the IRS deduction, or the "fine" of 10% for each year you benefited, as you had to do before the measure in question.
How to reduce the monthly installment without sacrificing the PPR?
To save money on your mortgage without sacrificing your PPR, there are other solutions available now.
In addition to the measures in force to support mortgage credit, imposed by the Government, such as setting and reducing the monthly installment and interest rate subsidy, each subject to certain requirements, you can also resort to renegotiating terms or transferring credit.
Support measures for mortgage borrowers
The first measure allows to fix and reduce the value of the monthly installment through the application of an index corresponding to 70% of the 6-month Euribor, from November 2 to the 1st quarter of 2024, for credit contracts for own and permanent housing with a variable rate (or mixed, in a variable period). After four years, it is necessary to reimburse the differential value that is spread over the remaining term of the contract.
The second measure is based on a temporary bonus on credit interest rates, calculated on the value of the benchmark above 3%, aimed at borrowers with incomes up to the 6th bracket, applied at 100% when the effort rate is 50% or more, and at 75% when the effort rate is between 35% and 50%. In this case, the annual limit that can be enjoyed from the discounted amount is up to 800 euros.
Renegotiation of conditions and transfer of housing credit
The renegotiation of terms can be done by going to your bank and expressing your dissatisfaction with the current credit. In order to lower your monthly installment, you can request that they present you with new conditions, which may or may not meet your savings expectations.
In case they do not match, consider transferring credit. This is the current solution that most Portuguese people have opted for in order to reduce their monthly mortgage payment, especially those with variable interest rate contracts. As they are linked to the Euribor and are consequently rising regularly, contracts with variable rates have had a significant impact on their home loans.
By transferring your home loan to a new bank, you can get a fixed or mixed rate at a lower value than the variable rate. This can significantly lower your monthly installment.
Need help moving forward with any of these processes? Talk, first, to a credit intermediary who will help you understand the best solution for you. The agents at Poupança no Minuto take care of all the paperwork, communication with the banks, and finally present you with the best proposal.
Leave your savings in the hands of Poupança no Minuto: a free and fully personalized service for you.