How to enter 2024 with the right savings?

If you need help lowering installments, talk to Poupança no Minuto right away. We can assist you through all the processes that we present next.

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The past year was quite challenging for most Portuguese people, especially on a financial level. With the continuous increase in interest rates and a growing inflation, the struggle to meet all the costs and expenses of the monthly budget was significant.

But the improvements are starting to be seen at the bottom of the horizon now, with interest rates stabilizing and inflation slowing down.

So, in order to enter 2024 with the right savings in your wallet, let's do a review of everything you can do to reduce your expenses, with a special focus on housing credit or other financing, and on insurance.

Does it make sense to access the Government's housing credit support measures?  

As a way to support the Portuguese people, the Government launched this year measures that allow to support mortgage borrowers due to the increase in their monthly payments resulting from the rise in interest rates.

The measurements are based on the following:

Fix and reduce the monthly installment.

• Contracts signed until March 15, 2023, with a residual term of five years or more, can now set the installment value for two years, applying a new index equivalent to 70% of the 6-month Euribor;  
• After four years, the differential value between the installment payment you were making and the one you will now pay with the implementation of the measure must be reimbursed, being spread out over the remaining period of the contract.
• This measure can be requested from your bank until the end of the 1st quarter of 2024, by credit applicants for their own home with a variable rate period.

Temporary interest bonus  

• It represents a reinforcement of the bonus measure that was already in force and allows the bonus to be calculated on the value of the index above 3%.  
• It is aimed at borrowers with incomes up to the 6th tier, without differentiation;  
• It is based on a 100% bonus model when the effort rate is equal to or greater than 50%, and a 75% bonus when the effort rate is between 35% and 50%.
• Note also that the annual limit for the bonus amount is up to 800 euros.

Do not meet the requirements to access the above-mentioned Government measures, or do not consider it worthwhile? Then, let's continue to evaluate options.

Do you have a PPR? Redeem by the end of the year to pay off your mortgage without penalties.

If you have a retirement savings plan (PPR), be aware that a measure has been in effect since October 21, 2022 until the end of 2023, allowing you to withdraw from the product to partially or fully pay off your mortgage without penalties.

You still have a few days until the end of the year to do it, without being penalized! The goal is for borrowers to be reimbursed without being penalized, considering the current situation we are going through. But there are rules: You can only redeem up to the monthly limit of the value of the Indexante dos Apoios Sociais (IAS) in 2023, which corresponds to 480.43 euros.

The measure allowed individuals to subscribe to a PPR until this month of December and still benefit from tax advantages by withdrawing the maximum monthly amount of the Social Support Index (IAS). This without having to repay the IRS deduction, i.e., the 10% fine for each year of benefit, as it was before the measure in question.

Not satisfied with your contracts? Renegotiate conditions.

Nothing better than ending the year by reviewing all your expenses and looking at your portfolio of loans and insurance. Evaluate: Are you happy with the payments you make for the products? Do the terms still suit your needs, preferences, and especially, possibilities?

If the answers are negative, it is time to go to the contracting entities and ask them to review the current conditions, both for loans and insurance.

You may be paying more than you should, and without the conditions that meet your current needs.   

For this process, you can always turn to a credit intermediary or insurance mediator who, for free, help you mediate the entire process and reach suitable proposals for you.

After all, in case you remain unsatisfied and need to resort to the following option, a credit intermediary or insurance mediator can be crucial...

Still unsatisfied? Transfer the contract to another entity.

And if you continue to be dissatisfied with the new renegotiated conditions they present to you? Well, in that case, you can always transfer the contract in question to a new entity, whether in the case of credits or insurance.

Let's take the housing credit as an example. If, currently, you have a financing contract indexed to the Euribor, with a variable rate, you must be paying a significantly higher monthly installment than the original one. This is due to the increases in interest rates that consequently lead to increases in Euribor rates in various terms.

Now that Euribor rates are at 4%, just compare these values with the interest rates that banks have been promoting in fixed and mixed interest rate schemes for new contracts. This means that if you change banks and take out a loan now with another institution, you can access these campaigns.  

But going further back: What does it mean to have a fixed or mixed rate in home loans? In the fixed rate, it means that you will fix the rate for the entire remaining period of the credit contract, guaranteeing greater security and ending the variations in installments, dependent on Euribor variations. A mixed rate allows you to fix the rate in the first period, then returning to the variable rate.

This latest fee option is the regime that the Portuguese have most adhered to, as it allows for a fixed value now and, when it is anticipated that Euribor rates will fall again, return to the variable rate regime. And to understand the difference in values, there are banks promoting mixed rates starting from 2%, fixing the rate for one year.

Are you interested in this option and does it fit your situation? Simulate your specific case to understand how much you could save with our Credit Transfer Simulator.

Amortizing or consolidating are also options  

Finally, there are still two interesting options regarding credits: You can amortize or consolidate financing.

Let's break it down. Amortization may be interesting at this time, especially regarding mortgage credit. This is because there is a measure in effect that allows suspending the commission for early repayment in the case of financing with a variable interest rate. This means that you can amortize, partially or fully, amounts of the mortgage credit to finish or reduce the debt, without penalties.

In addition, if you have several credits (such as a car loan, personal loan, and credit cards), you can consolidate them all into one. The consolidated credit is a product with attractive interest rates, which allows you to pay a lower installment for the whole package, than you would individually for each credit. And in terms of practicality, instead of worrying about several installments, you only have to pay one for all credits. 

Remember: Always simulate, request proposals, evaluate accounts, so that you can understand which are (and if they are) the most advantageous solutions for you, considering the short, medium and long term. That's why you should seek help in these situations, so they can advise you and help you make the best financial decisions.

If you want to enter 2024 with the right savings, it is with Poupança no Minuto that you should talk to. We help you with all the solutions above, and completely free of charge. Start the year off on the right foot (and with the right money)!