Renew the credit agreement
But what does this mean?
It's a term used by banks and it's important for all mortgage consumers to know how to avoid losing their home in the event of default. After all, life can be complicated and it is best to be prepared and well informed about how to act. We will explain these further to help you understand these confusing arrangments between banks and customers in Portugal.
Renewal of the credit agreement (article 28 of DL 74-A / 2017)
If things get complicated and the bank faces repeated defaults, many consumers wonder if there will still be time to keep the house and avoid selling it while they continue to pay the mortgage.
In fact, the consumer is entitled to recover not only within the period to object to the foreclosure or even the foreclosure sale of the mortgaged property, under the following conditions:
- No claims from other creditors;
- Late payment and unpaid instalments, as well as interest on late payments and expenses that the creditor has assumed (duly documented and justified).
If the consumer exercises the right to renew the contract, the termination of the contract will be ineffective and the credit contract will remain in effect. Thus maintaining the same terms and conditions initially agreed upon, with possible changes.
In this case, there will be no renewal of the contract, i.e. transformation of one debt for another, with the extinction of the old one, nor the guarantees associated with it.
However, there is a limit to recovery:
The lender will only be obliged to accept it twice during the term of the mortgage loan contract.