Become someone who compares credit before signing
In 5 min you'll know: why the (annual percentage rate of charge — total credit cost) is the only number that lets you compare mortgage offers — and what to ignore on the FINE
In Block 1, Lesson 8, you learnt that the repayment figure is misleading and that the is the only number that lets you truly compare credit. Now you apply that logic to the biggest debt of your life: the mortgage. If you're borrowing €150,000 over 30 years, a 0.2% difference in the TAEG translates to thousands of euros. The rule: compare at least 3 mortgage offers using the TAEG, not the monthly repayment.
Before you continue: what is the TAEG, and how does it differ from the nominal rate?
(Answer in the next paragraph.)
Portuguese mortgages have three rate components: (the Eurozone interbank reference rate), the spread (the bank's margin) and any insurance and fees. The final rate is Euribor + spread. If 6-month Euribor is at 2.5% and the spread is 1%, you pay 3.5%. But Euribor changes — and when it rises, your repayment rises. In 2022, Euribor went from negative to above 3%, and anyone with a high spread saw their repayment skyrocket within months. A fixed rate eliminates this risk; a variable rate gives you a lower spread but exposes you to the market.
The FINE (Ficha de Informação Normalizada Europeia — Standardised European Consumer Credit Information form) is the document the bank is required to give you before you sign. It contains the TAEG, the MTIC (Montante Total Imputado ao Consumidor — i.e. everything you will pay over the life of the contract), the monthly repayment, mandatory insurance costs and fees. If the bank doesn't show you the FINE, you're not comparing — you're being sold to. The TAEG includes interest, arrangement fees, property valuation fees, life insurance and multi-risk insurance. The TAN (Taxa Anual Nominal — Nominal Annual Rate) includes only interest. Anyone showing you the TAN is hiding costs.
The MTIC is the number nobody wants you to see. It's the sum of everything you will pay: capital + interest + fees + insurance over 20, 25 or 30 years. A €150,000 mortgage over 30 years at a TAEG of 3.8% has an MTIC of approximately €240,000. In other words: you will pay €90,000 more than you borrowed. If the TAEG rises to 4.3%, the MTIC jumps to €260,000. That's a €20,000 difference from a 0.5 percentage-point change. Always compare the TAEG and MTIC between offers — it's the real cost of credit.
Notice: Mowei is a financial education and comparison platform. We are not financial advisors authorised by the Banco de Portugal. This lesson is general information, not personalised advice. For decisions about specific products, consult a financial intermediary registered at www.bportugal.pt.
Compare mortgage offers by APR (3 min) →
Your promise: Before the end of the month, I will request the FINE from 3 different banks and compare the APR, not the monthly payment.