What does the spread represent in mortgage credit?

Mortgage credit: What is the spread?

In home credit, the spread is one of the interest rates associated with the loan and represents the profit margin of banks. This rate is applied by each bank to each customer, as it is determined through the credit history, income, loan amount, and guarantees provided by the consumer.

So, the value of the spread will mainly depend on the credit risk level. This is because it is a rate that represents the default risk of a customer.

In other words, the higher the borrower's effort rate, the higher the spread will be. If the credit holder does not provide guarantees, the spread will be penalized. But it can also be rewarded, depending on certain factors, as we will see below.

What is the impact of spread on credit?  

It is still important to mention that banks often offer a bonus on the spread, if you contract other financial products for the credit.  

This can happen in the following cases:  

• Hiring debit or credit card;  
• Salary domiciliation to the credit account;  
• Having the required life and multirisk insurance policies contracted through the bank.
• Add savings products, like a savings account or a retirement savings plan.  

For example, imagine that a certain bank offers you a spread of 1.2% on your housing credit. However, if you subscribe to the required insurances (life and multirisk), through the insurance company associated with the bank, the institution proposes a spread of 1%.  

Is the credit with the lowest spread the cheapest?

No. Not always the mortgage credit with the lowest spread represents the cheapest.

The value of the spread has an impact on what you will pay for credit in monthly installments, but it is not the only factor to consider.

Even with a bonus on the spread, credit may be more expensive due to other parameters. Such as required insurance, Nominal Annual Rate (TAN), Global Annual Effective Rate (TAEG), whether it has a variable rate linked to the Euribor or fixed rate, and other charges associated with credit will have an impact on the amount you pay monthly. 

It is important to always proceed with accounts that support your analysis. For example, if you choose to subscribe to insurance required outside the bank, even with a penalty on the spread, it may be possible to achieve a lower monthly installment.

Therefore, when studying the ideal spread for your credit, you should take into account that its value does not indicate, by itself, the cost of credit and that it may vary depending on other conditions and products added to the loan.

Can I change the spread at any time during the contract?

Yes. It is possible to request a change in the conditions of your mortgage credit at any time during the contract, by requesting a renegotiation of the contract terms with the bank.

However, in order to lower the spread, you may have to contract the aforementioned financial products to receive a bonus in the amount.  

You must also know that if you do not want to change the spread, the bank cannot do it for you without consent and without renegotiating the conditions by mutual agreement.

If you want to renegotiate the terms of your mortgage, even after an initial proposal from the bank, you can always turn to a credit intermediary. A mediator like those at Poupança no Minuto is on your side throughout the process, so that you can get the most suitable credit conditions for your situation.