Early repayment of a mortgage loan is the dream of every borrower. Quickly relieve yourself of the burden of obligations and spend money on yourself and entertainment. What is the best way to pay off your mortgage ahead of schedule?
The topic of early repayment of a mortgage loan is always relevant
A home loan is very expensive and burdensome for Russian citizens. Therefore, every second borrower tries to repay the loan as soon as possible and reduce the financial burden. According to the legislation of the Russian Federation, the borrower has the right to repay the mortgage loan ahead of schedule, in part or in full.
As a rule, the main condition of banks for early repayment of a loan is the conscientious fulfillment of obligations to the lender, delays are not allowed. The credit institution establishes the type of payment. In practice, there are two types of payment - annuity and differentiated. Today, the most popular is annuity, a large part of the payment is interest. This type of payment is more profitable for banks, in contrast to the differentiated one, with it, first of all, the main debt is paid, and then the interest for the use of borrowed funds. The second payment calculation is beneficial for the borrower, but sometimes it turns out to be quite large.
Also, in the mortgage agreement, the minimum amount for partial early repayment and the repayment method are immediately prescribed: with the recalculation of the payment amount or change in the loan term.
What is the best way to extinguish a mortgage ahead of schedule with annuity payments
Consider early repayment schemes for annuity payments:
- Recalculation of the payment schedule, without changing the amount. So the amount of the monthly payment remains the same, the term of the contract changes.
- Changing the payment amount, without recalculating the terms of the loan. In this case, the picture of the reciprocal of the regular contribution becomes less, but the term remains the same.
For the quick closing of the loan, the most advantageous is the scheme with the reduction of the loan term. Remuneration for the use of borrowed funds is charged for the entire loan period, so it will be more profitable to shorten the loan term. What do banks do ?! Most often, a scheme with a decrease in annuity is used and the second option is not even offered to an inexperienced borrower. Or they come up with a lot of reasons why it is not convenient, for example, "you will definitely need to personally visit the bank branches to get a new payment schedule."
If you have decided to pay off your mortgage ahead of schedule, you need to determine the goal that you are pursuing. If we reduce the unaffordable loan payment, we will reduce the payment amount, but this method will not bring savings. And if you want to save money, then you need not be lazy, visit bank branches and reduce the loan term. Let it be reduced by 2 months, not so much. But you will pay less interest to the bank.
