A mortgage loan is a long-term financial burden that you always want to get rid of as soon as possible. And if such an opportunity arises, you must definitely take advantage of it.
Instructions
Step 1
The advantages are obvious: firstly, the shorter the term, the less the amount of interest that you will pay to your “uncle”, i.e. the cheaper the loan. Secondly, the freed up funds can be profitably invested and income. Thirdly, having paid off the loan, you can freely dispose of your new property, say, an apartment.
Step 2
Even before concluding the contract, you should make sure that the possibility of early repayment is provided for in it and that the bank will not fine you for this (and this happens).
Step 3
Calculate how much you can increase your regular payments. If at the moment the financial situation is favorable, then even a slight (by 10-15%) increase in regular payments can save you up to 10 years of your mortgage and save you tens of thousands of dollars (after all, mortgage amounts are usually rather big).
Step 4
If, for example, you sold your old house or car, you can make a one-time significant payment by reducing the amount of the principal debt, which will also have a beneficial effect on the further situation and, while maintaining the size of monthly payments, will reduce the term of the mortgage (and hence its cost).
Step 5
Remember that in all these cases, the bank is obliged to recalculate the payment schedule for you. If you were offered a choice of reducing the terms or sizes of regular payments, choose a reduction in payments, and use the freed up money again to pay off the principal debt.
Step 6
Keep in mind that the amount of the principal affects the amount of the annual premium, so by reducing the amount of the principal, you get the savings here too.
Step 7
And finally, remember that early loan repayments are not profitable for banks, so go back to point one and make sure that the terms of the agreement allow you painless early repayment of the loan. Otherwise, either do not conclude a contract, or accept the fact that the mortgage will have to be paid for the entire term in full.
