You can think of the “differential” as the bank’s profit when you’re dealing with a variable or mixed-rate mortgage.
First off, let’s clarify what this “differential” is all about. For most loans, this little add-on is tacked onto something called Euribor, which is basically the interest rate that banks in the eurozone use when they lend money to each other.
Now, when you’re shopping around for mortgage offers from different banks, what really matters is the fixed percentage that they add to Euribor. This combination of Euribor and the added percentage makes up the total cost of your mortgage, also known as the nominal interest rate (TIN). So, pay attention to that “differential” when comparing mortgage options!