An increase in the interest rate will cause an increase in monthly payments, which will lead to the lowering of your monthly budget to meet your living expenses. The Portuguese Consumer Protection Association (DECO) presents some suggestions to help combat this situation.
According to DECO Algarve, for people facing an increase in mortgage interest, it would be better to “start asking the bank, where you have your mortgage, for a simulation that reflects the increase in the Euribor”.
Then do your math and calculate the effort rate (the weight that monthly credit payments have on family effort budget income) that you would start to have. If it is above 35 percent, DECO suggests that you negotiate with your bank in order to promote a solution that brings you more financial balance, reinforcing your ability to pay in the event of a possible increase in mortgage interest rates.
Also, DECO recommends assessing the consequences that the increase in the interest rate will have on your family budget. “For many households, both short and medium term, the increase in the interest rate means the worsening of their financial situation”, DECO said.
Whenever you find it hard to pay the bills, try to find a viable solution. Usually, the bank has the legal duty to monitor the loan contracts, preventing cases of non-compliance. However, in case of default, the credit institution must contact you to negotiate payment solutions.
Whenever you need, DECO provides advice in managing your finances and supports the over-indebted consumers, through DECO’s Financial Protection Office, ask for support through gasdeco.net.
Tel: 289 863 103
It is also possible to schedule Skype appointments