Variable mortgages: in this case, this percentage is taken together with another percentage (a benchmark, usually Euribor) to calculate the nominal interest rate (NIR) of the loan. The NIR is one of the two components which make up the interest rates in variable mortgages (the other is the benchmark). However, the spread does not change over the life of the loan (unlike the Euribor, which is adjusted every twelve months).
We can bring down the rate of interest by also taking out combined or subsidised products (other products sold by the bank).
So, does the spread affect my mortgage?
As we have just seen, the spread determines part of the interest that we will pay for our mortgage loan. It is more important in variable mortgages, and not so much in fixed-rate ones.
And can we pay less in the way of spread in our mortgage?
Yes, we can pay less spread when we take out other products sold by the bank such as life insurance, pension plans, credit cards, or when we arrange to have our salaries paid directly into our account.