What is the Spread, and how can I reduce it?

What the spread is

On a variable-rate loan, the interest rate has two parts. One is the reference rate, which is usually Euribor. The other is the spread, which is the bank's margin.

Euribor goes up and down over time. The spread is set by the bank when it makes its offer. That is why it is the part you can negotiate.

Why is my spread different from someone else's?

Each bank sets the spread case by case. It takes into account, for example, the customer's credit risk. It also looks at the share of the home's value that the loan covers.

A larger deposit lowers that share. See the guide Do I always need a 10% down payment?

How to lower the spread

The bank may offer a lower spread if you take other products. Debit or credit cards are one example. The technical name is optional tied sales.

Those products may have costs too. Ask the bank how much they cost and how much they lower the spread.

Ask as well what happens if you drop them later. The bank may raise the spread, in line with the contract. According to Banco de Portugal, that increase can only happen within one year. Source: Banco de Portugal — Four tips for comparing home loan offers (in Portuguese).

A lower spread is not always cheaper

Banco de Portugal is clear: do not look only at the spread. A loan with a lower spread can cost more in total.

Always compare two figures in the offers. The APR (TAEG in Portuguese) puts all the costs of the loan into one yearly percentage. The MTIC is the total you will pay: the loan plus all the costs.

Compare offers for the same amount and the same term. The cheapest one has the lowest APR and the lowest MTIC. See the guide What is MTIC, and why is it more important than the Spread?

What a lower spread is worth

An example. You borrow €200,000 over 30 years, with Euribor at 2%. With a spread of 1.2%, the interest rate is 3.2%. The repayment is about €865 a month.

With a spread of 1.0%, the interest rate is 3.0%. The repayment is about €843 a month. That is €22 less each month.

If Euribor never changed, that would be about €7,800 over 30 years. These are example figures. In the mortgage repayment calculator you can change the spread and see the difference each month.

Can I lower the spread after signing?

There are two ways. The first is to renegotiate with your bank. The spread only changes if you both agree. The bank cannot charge fees for the renegotiation, or require other products.

The second is to move the loan to another bank. In practice, the new loan pays off the old one. The old bank may charge a fee. It is at most 0.5% of the amount repaid on a variable rate, and 2% on a fixed rate.

See the guide Can I transfer my mortgage to another bank?

Where FINOVA helps

We take your case to several banks at the same time. We compare the offers with you by total cost, not only by spread. Our fee is paid by the bank.

Sources

• Banco de Portugal — Four tips for comparing home loan offers (in Portuguese)
• Banco de Portugal — Interest rates in home loans
• Banco de Portugal — How to renegotiate
• Banco de Portugal — How to repay and transfer

Sources checked on 22 September 2026.