The factor that most differs from bank to bank is the rates that are described for your home loan. Each rate has a different meaning and it is important to know what each one represents in home loans before proceeding, so that you can make a better assessment. There is the spread, the Euribor, the TAN, the APR and the APR, but what does each one mean?

spread

The spread represents the bank's profit margin when making the loan to you. This is determined according to the level of risk that the institution incurs in granting its credit.

Depending on the products that the bank suggests that you associate with your credit, they may offer you a spread bonus, which is an aspect you should be aware of. If you notice, when a banking institution makes you an offer, it presents you with a lower spread if you subscribe to certain products or services. Among them is the obligation to pay the salary in the account to be opened, contracting a credit card, life and multi-risk insurance with the insurance company associated with the bank, among others.

Evaluate whether the products and services they are offering you in exchange for a lower spread really interest you and whether they help you to have lower total charges or just the provision of credit.

Euribor

Euribor is one of the components that will define how much you will pay for your credit (if you contract a credit associated with a variable rate). This is because this is the most recurrent index in mortgage loans in Portugal and can be used for different periods, the most common being 6 or 12 months.

This rate matters when deciding whether to opt for a fixed, variable or mixed rate on your home loan. If you choose the variable rate, it will be the Euribor value that will define whether the value of your installment goes up or down, through the review of the installment that will occur every 6 or 12 months, depending on the term you choose.

TAN

Another rate you should look at when comparing bids is the Nominal Annual Rate (TAN), which includes the interest you will pay on your credit. That is, it represents the final interest rate. It is the sum of the spread with the index used in the credit in question.

This rate will impact the total amount you will pay for your home loan and, consequently, the monthly installment.

TAE

The Effective Annual Rate (TAE) is a rate that aggregates the values ​​of the TAN, charges and commissions associated with your home loan.

But the TAE does not include the value of life and multi-risk insurance or other products contracted in association with your credit.

APR

It is the Annual Rate of Effective Charges (APR) which includes all the charges mentioned above, including interest, commissions, insurance and products subscribed.

So, this is the main rate to look at when comparing several offers from different banks, as it is the most general indicator.

Review the MTIC for an overview

If you want an aggregating indicator of all costs that will add up to the total loan amount, look at the Total Amount Charged to the Consumer (MTIC).

This sheet is provided when you are presented with the proposal, and shows the total amount of the loan, with interest, commissions, taxes and other charges levied by the bank.

So, after realizing all the different rates for each bank in the simulations, look to the MTIC for an overview.

And don't forget that if you have several proposals in hand, the decision-making power is on your side, so you don't lose anything if you try to negotiate. Also consider hiring a credit intermediary to help you get the best conditions for yourself and in negotiating with banks.

Font: Sapo