Selling a house with a mortgage

Explain that you are preparing a sale and ask for the steps, deadlines and parties involved. Request an itemised estimate of the repayment, including interest and applicable charges, and confirm how the document needed to cancel the security will be made available.

Banco de Portugal indicates a minimum notice of ten working days for full early repayment. Information on the financial impact of the operation must be obtained. The minimum notice does not remove the need to plan the signing and confirm the availability of everyone involved. [1]

In the credit context, the distrate (the discharge document) is associated with the extinction of the debt and the documentation needed to cancel the mortgage. The financial settlement and the registry update should be followed through to the end.

In a sale, confirm in advance how the consent to cancel will be coordinated with payment. The general deadline for delivering the document after the contract ends should not be confused with the specific procedure of a simultaneous transfer. [1–2]

The general regime sets limits on the early repayment fee: 0.5% during a variable-rate period and 2% during a fixed-rate period. Lower contractual conditions and applicable exemptions may exist. Ask the bank to confirm the regime in force on the date of the sale, without presuming that a temporary measure from earlier years remains valid. [1, 3]

Compare the simulation with the contract and ask for clarification of any item you do not recognise. The final cost should be built into the budget for the transaction.

Illustrative example: a house is sold for €400,000 and the repayment to the bank is estimated at €150,000. The €250,000 difference is only a starting point. The remaining costs of the sale and the applicable tax effect still need to be considered.

Before committing that balance to a new purchase, prepare three figures: the price received, the payments to be made on the sale and a reserve for later obligations. Update them once the date is set.

1. Gather the loan details and the property documents.
2. Ask the bank for the procedure and an estimate.
3. Set conditions and deadlines in the CPCV that are compatible with the process.
4. Confirm payments, documents and parties with the responsible entity.
5. Verify completion of the procedures after the transfer.

If there are other securities, attachments or loans linked to the same property, disclose that information at the outset. A solution designed for a simple mortgage may not cover the full situation.

Build a combined timetable. Identify whether you need the proceeds of the sale to pay the deposit, the down payment or the taxes on the new purchase. Also decide where you will stay between handing over one house and the other becoming available.

Avoid assuming that two deeds can happen on the same day merely because that is convenient. Confirm feasibility with the banks and professionals preparing them before accepting incompatible obligations.