Mortgage quote in Portugal: 7.73% fixed for 2 years — thoughts?

[nico.moss]

A closer look at the Lisbon quote has raised a different question: should I judge it only over the two-year fixed period or over the time I realistically expect to hold the loan? The purchase is around €1,044,000 and the quoted fixed rate is 7.73%, but the fee and loan-to-value band have a substantial effect on the result.

I’m now comparing payments plus compulsory charges over two years, then looking separately at early-repayment costs and overpayment flexibility. That seems more useful than choosing by the headline rate alone, especially if refinancing after year two is uncertain.

Would the next step be to ask each lender for a written schedule showing the exact loan amount, all upfront costs, permitted overpayments and what rate or method applies after the fixed period? Portability also sounds attractive, but only if the terms explain whether a new affordability assessment would still be required.

 

[SmallChart]

For a two-year fix, I’d compare the total cash outlay over those same two years: payments, arrangement fees and any other unavoidable loan costs. APR can help, but it may reflect assumptions beyond the period you actually expect to keep the mortgage.

I’d then run a separate affordability test for the reset date. A cheap two-year comparison is misleading if it depends on refinancing being easy or rates falling.

 

[fair_bridge]

How large is the loan after your deposit? The loan-to-value tier may explain more of the difference than the advertised rate.

I would not automatically pay a large fee for overpayment terms unless you have a realistic amount and timetable for making those overpayments. Also ask the lender to state exactly what happens after year two, and whether “portability” would preserve the loan terms or still require a fresh assessment. The wording matters, and Portuguese terms should be confirmed for the specific offer.

 

[SmallChart]

I slightly disagree that total two-year cash outlay alone settles it. It is the best starting comparison, but monthly affordability also matters: two offers with similar two-year totals can create very different pressure each month.

I’d put the quotes into a simple table with loan amount, fixed-period payments, fees, balance remaining after two years, overpayment cost, early-repayment cost and the post-fix basis. Then compare three scenarios: keep the loan, refinance after two years, or sell/move early. That should show whether the expensive flexible quote is buying something you are actually likely to use.