What does the spread represent in mortgage credit?

Mortgage credit: What is the spread?

In housing credit, the spread is one of the interest rates associated with the loan and represents the profit margin of banks. This rate is determined by each bank for each customer based on credit history, income, loan amount, and guarantees provided by the consumer.

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

That is, the higher the borrower's effort rate, the higher the spread will be. If the credit holder does not provide collateral, the spread will be penalized. But it can also be rewarded, based on certain factors, as we will see below.

What impact does the spread have on credit?  

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

This can happen in the following cases:  

• Debit or credit card hiring;
• Salary domiciliation to the credit account;  
• Contract the required insurances, life and multi-risk, through the bank.
• Add savings products, like a savings account or a retirement savings account.  

For example, imagine that a certain bank offers you a spread of 1.2% on your home loan. However, if you subscribe to the required insurances (life and multi-risk) through the bank's associated insurance company, the institution proposes a spread of 1%.  

Is the credit with the lowest spread the cheapest?  

No. Not always the home loan 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 can be more expensive due to other parameters. Such as required insurance, the Nominal Annual Rate (TAN), the Global Effective Annual Rate (TAEG), whether it has a variable rate indexed to 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 the insurance required outside the bank, even with a penalty in 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 consideration that its value does not indicate, by itself, the cost of the credit and that it may vary according to other conditions and products that you add 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 home loan at any time during the contract, by requesting a renegotiation of the contract terms with the bank.

However, in order to lower the spread value, you may have to purchase the financial products mentioned above in order to receive a bonus.

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

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