Most people buying a home in Portugal compare the TAN. That's the wrong number. The TAEG tells you the true cost — and the difference can easily reach €15,000 over the life of a loan.
TAN vs TAEG: why the distinction matters
TAN (Taxa Anual Nominal) is just the interest rate. TAEG (Taxa Anual Efetiva Global) includes everything: interest, commissions, required insurance, and any other mandatory fees. A bank might advertise a TAN of 3.5%, but with a required life insurance policy and processing fees, the TAEG could be 4.2%. When comparing proposals from different banks, always use the TAEG — it's the only apples-to-apples comparison.
Understanding the spread
Your mortgage rate is almost always Euribor + spread. The Euribor is set by the European Central Bank and you cannot negotiate it. The spread is what the bank charges on top, and this you absolutely can negotiate. A spread of 0.8% vs 1.2% on a €200,000 loan over 30 years means roughly €14,000 in additional interest. Shopping around even two or three banks before signing can make a significant difference.
Renegotiating your spread
If you already have a mortgage, you can renegotiate your spread — either with your current bank or by transferring to a new one (portabilidade do crédito). Banks are more open to negotiation when you have a consistent payment history and when competition between lenders is high. The key metric they use is LTV (Loan-to-Value): if your property has increased in value since you bought it, your LTV has dropped and you have stronger grounds to ask for a lower spread.
Our Credit & Mortgages program covers simulations, spread negotiation, and everything you need to understand before signing a home loan.
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