Everyone who purchased housing for a loan, wonders: how to pay off faster. mortgage? Indeed, for almost every person this issue is psychological in nature. It is very difficult to realize and accept that for decades, the borrower will pay the debt.
Monthly payments from year to year, insurance extension payments and other financial investments in newly acquired housing give rise to a desire to pay off mortgage debt as quickly as possible.
Monthly Payment Schemes
Whether certain mortgage programs are beneficial is determined not only by a good annual interest and a convenient loan term, but also by the choice of one of the repayment schemes.
Annuity scheme
Allows you to make monthly payments in equal amounts over the entire loan term. But do not assume that the payment consists of equal halves: the main debt and interest for its use.
For example, a mortgage agreement is concluded for 20-25 years, and the first 13-15 years, almost the entire monthly payment will consist of accrued interest, but the loan body itself will undergo little change. How to quickly repay a mortgage in an annuity scheme? No way. The bank, even if the mortgage is paid in advance, will claim its interest from the borrower. Thus protecting yourself from losses and providing maximum income.
Differentiated circuit
Monthly payments are uneven. The first payments are quite large, but gradually reduced and not so much burden the borrower. And if at the time of registration the borrower wonders how to quickly repay the mortgage, then this is the best option for him to use.
Differentiated payment consists of equal parts of the debt body and accrued interest. And if the mortgage is repaid ahead of schedule, there is a proportional decrease in the amount.
Paying such monthly payments for almost all borrowers is an impossible task, so annuity payments are chosen . Indeed, most banks do not give the borrower the right to choose, by default using an annuity scheme.
When repaying a debt by an annuity scheme in the first 10-15 years ahead of schedule, the amount of the main debt does not change much. With a differentiated scheme, early repayment can be made at any time. You should carefully consider the proposed mortgage programs in order to timely calculate all the risks. Indeed, nothing can be changed in the process of repaying a debt.
Refinancing - a way to quickly pay off your mortgage
You can use refinancing programs not only if it is impossible to pay arrears in the future. A loan issued by another bank to repay the current mortgage can significantly reduce the repayment period. The only big disadvantage of refinancing is the emergence of rights to this housing as collateral (ch. 4 and ch. 6 of the law "On Mortgage").
If the borrower took advantage of refinancing only in order to save housing from encumbrance, then this is not worth doing. Housing with a mortgage and with refinancing will be used as collateral. In general, for a borrower, if the balance of his mortgage debt does not exceed 700 thousand rubles, it is best to obtain a consumer loan and close the remaining debt with it.
Bank conditions for early repayment of a mortgage
Before making an early repayment of a mortgage, it is necessary to study the section on this in the loan agreement to understand how much it will be profitable. The law “On Protection of Consumer Rights” contains an article from which it follows that the bank is not entitled to completely restrict the borrower from early repayment of the mortgage, as this infringes on his rights as a consumer. In Art. 810 of the Civil Code says that the borrower can fully repay the debt ahead of schedule, but with the consent of the lender. At the same time, the question remains open whether the bank has the right to charge additional fees for early repayment from the borrower.
Judicial practice on this topic contains decisions when both the borrower and the lender have won. Some banks oblige the borrower to notify them in writing 1 month before the expected date of full repayment of the mortgage.
Is it possible to repay a mortgage with maternity capital?
The first step for early repayment of a mortgage using maternity capital will be the submission of a statement from the certificate holder to the Pension Fund. It indicates all the data of the holder, and also explains what it is planned to spend money on. The application must be accompanied by a package of documents consisting of:
- certificate of maternity capital;
- passport holder of the certificate;
- copies of the mortgage agreement;
- bank statements, in which the amount of the principal debt and interest for using the loan are indicated;
- copies of the certificate of state registration of the right to acquired property;
- a notarized undertaking in which the borrower agrees to allocate shares for children and spouse in the acquired housing.
If the mortgage was registered with the spouse of the owner of the certificate, then it will be necessary to provide his passport and marriage certificate in addition.
If the Pension Fund makes a positive decision within 2 months from the date of application, the money will go to the creditor's account. This method allows you to positively answer the question of whether it is possible to pay off the mortgage with parent capital.
Tax deduction and mortgage
With the help of a tax deduction, you can also partially or fully repay a mortgage. Each of the citizens of the Russian Federation has the right when acquiring real estate to receive the opportunity to partially regain previously paid taxes. This is a property deduction. Of the amount of mortgage debt is calculated 13%. The borrower has the right to receive a tax deduction, which does not exceed 2 million rubles.
Plan, save, and save
If the borrower has already used the above methods, but he continues to be tormented by the question of how to quickly repay the mortgage, you can resort to the following tips.
It is necessary to carefully analyze the income and expenses. After reviewing your expenses, you need to decide which can be waived so that the saved money is sent monthly to pay off the mortgage. For example, stop drinking coffee from vending machines and eat in catering. And do not buy various unnecessary little things.
Still how can I repay a mortgage ahead of schedule?
Another way to quickly pay off your mortgage is to take extra work. You can do tutoring or conducting consultations, writing texts, or doing manual work.
And if you add another 10% to the monthly payment, this also allows you to answer positively to the question of whether it is possible to repay the mortgage ahead of schedule. You just need to know the scheme, thanks to which payments on loans will be made more correctly. Example, having several loans (consumer credit, credit card), the borrower must first pay the smallest loan. At the same time, it is necessary to add 10% to the monthly payment for this type of loan and do not forget about paying others. Move from the smallest to the greatest. After other loans are closed, there will be more available funds that the borrower must direct to repay the mortgage. Such a substantial increase will also serve as an option on how to quickly repay a mortgage.
In what order to pay on loans?
Having several loans, it would be more advisable for the borrower to pay back those loans with the highest annual interest. It must be remembered that for all loans you need to pay a monthly payment on time and in full. Prevent the formation of fines and penalties: after all, this is unnecessary expenses and, as a result, a delay in the payment of the main debt - mortgages.
Having paid the most “expensive” loans, you should start paying for small loans and only then send all the free money to pay off the mortgage.
Mortgage Insurance
The borrower is required by law to insure the acquired property, as well as his health and life. Is it possible to repay a mortgage ahead of schedule with the help of insurance? Alternatively, you can terminate the insurance contract after the loan has been signed. But this should only be done if the borrower is fully confident that after such a step the bank will require him to repay the mortgage ahead of schedule. But if the terms of the agreement do not provide for early repayment of the remaining amount of the debt, then such a step by the borrower will provoke the bank to file a lawsuit. After all, this is a violation of the loan agreement.
When concluding a loan agreement, you must know in advance for how long the lender obliges his borrower to insure property. If the contract states that insurance should be issued for the entire loan term, then in this case you can not dream of saving.
But if the contract states that the borrower is required to issue an insurance policy once, this will be an option on how to quickly repay the mortgage.
Insurance is issued for a period of 1 year to five years. After the expiration, the line of the insurance contract must be extended. But if the contract does not say that insurance is required to be extended, the borrower is not required to do so. After all, such an item is missing in the signed document.