What does the spread represent in mortgage credit?
Are you going to apply for a mortgage and came across the concept of spread? This is one of the rates associated with this loan and can vary depending on some aspects. Understand how spread works so that you have a rate adjusted to your budget.
What is the spread of a home loan?
In mortgage credit, the spread is one of the interest rates associated with the loan and represents the profit margin of the banks. This rate is applied by each bank to each customer, as it is determined through credit history, income, loan amount, and guarantees provided by the consumer.
So, the value of the spread will depend mostly on the level of credit risk. This is because it is a rate that represents the risk of default by 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. However, it can also be rewarded based on certain factors, as we will see below.
What is the impact of spread on credit?
It is also important to mention that banks often offer a bonus on the spread if you hire other financial products along with the loan.
This can happen in the following cases:
- Hiring a debit or credit card;
- Salary domiciliation to credit account.
- Purchase the required insurance, life and multi-risk, through the bank.
- Add savings products, such as a savings account or a PPR.
For example, imagine that a certain bank offers you a spread of 1.2% on your mortgage. However, if you subscribe to the required insurances (life and multi-risk) through the bank's associated insurer, the institution proposes a spread of 1%.
Is the credit with the lowest spread the cheapest?
No. Not always does the housing credit with the lowest spread represent the cheapest.
The value of the spread impacts 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 insurances, the Nominal Annual Rate (TAN), the Effective Annual Global Rate (TAEG), whether it has a variable rate indexed to Euribor or a fixed rate, and other associated charges will impact 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 of 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 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, requiring a renegotiation of the contract terms with the bank.
However, in order to lower the spread, you may have to hire the financial products mentioned above, in order to obtain a bonus on the amount.
You should 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 home loan, 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 entire process, so that you can get credit conditions that are more tailored to your reality.