What does the spread represent in mortgage credit?
Are you going to take out a home loan and came across the concept of spread? This is one of the rates associated with this loan and can vary depending on some aspects. Learn how the spread works so that you have a rate tailored to your budget.
Mortgage credit: What is the spread?
In housing credit, the spread is one of the interest rates associated with the loan and represents the banks' profit margin. The value of this rate is applied by each bank to each customer, as it is determined through the credit history, income, amount of the loan, and guarantees given by the consumer.
So, the value of the spread will depend mainly on the credit risk level. This is because it is a rate that represents the risk of default by a customer.
In other words, the higher a 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, based on certain factors, as we will see below.
What is the impact of credit spread?
It is also important to mention that banks often offer a bonus in the spread if you contract other financial products for the credit.
This can happen in the following cases:
- Debit or credit card hiring;
- Salary domiciliation to the credit account;
- Hire the required insurance, life and multi-risk, through the bank;
- Adding savings products, like 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 insurance (life and multi-risk) through the bank's associated insurance company, the institution proposes a spread of 1%.
Is the cheapest credit the one with the lowest spread?
No. Not always the home loan with the lowest spread represents the cheapest.
The value of spread impacts what you will pay for the credit in monthly installments, but it is not the only factor to consider.
Even with the bonus in the spread , credit can be more expensive due to other parameters. Such as required insurances, the Nominal Annual Rate (TAN), the Effective Global 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 required insurance 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 must take into consideration that its value does not indicate, by itself, the cost of credit and that it can vary depending on other conditions and products that you add to the loan.
Can I change the spread at any time in the contract?
Yes. It is possible to request a change in the conditions of your mortgage at any time during the contract, by requesting a renegotiation of the terms of the contract with the bank.
However, in order to lower the value of the spread, you may need to hire the financial products mentioned above to receive a bonus.
You should also know that, if you do not want to change the spread, the bank cannot do it for you without your consent and without renegotiating the terms 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 you can get the most suitable credit conditions for your situation.