Many mortgage borrowers today are trying to make as much money as possible than is generally supposed. How is it more profitable to early repay a mortgage? It is worth noting that reducing payments or deadlines in different situations has its advantages.
Basic concepts
As part of the payment of such a debt, when a person has extra money, they can be spent on early repayment. But not everything is so simple. Immediately there are a lot of questions about how best to get rid of a loan, reducing the period or amount. When is it better to do it: at the end or at the beginning? Accumulate funds and fully pay them or make small amounts? It is worth noting that the method directly depends on the specific client and his financial situation, as well as income. How confident the person is standing on his feet - this is the main question.
Chart Change Options
In almost one hundred percent of cases, Russian financial institutions with mortgages operate according to the annuity payment system. What does it mean? Is it profitable to repay a mortgage ahead of schedule in this case? The bottom line is that at first they pay mainly interest on the loan, and then - bank debt. After the prepayment procedure, the credit parameters change, as the amount of debt to the company is being reorganized. Therefore, bank employees have to redo the schedule. Offered:
- Reduction of the loan term within the framework of a constant monthly payment.
- Reduced transfers, but leave the same number of months of payments.
How to pay off a mortgage ahead of schedule? Reduction of the term or amount is better to choose? Against the background of the first option, the monthly load does not decrease in any way, and the percentage becomes lower due to the short period. The second involves lowering the monthly payment; the family is exempted from the possibly excessive load in the crisis period.
Methods and Tips: Reducing the Duration
Early payment of fifty to one hundred thousand rubles allows you to reduce the period by several months at once. In that case, if you open the calculator and calculate the available options, then within the framework of a single early repayment, it will still be more profitable to reduce the period. Given that the size of the payment in this case will remain the same, the amount of the overpayment of the banking organization for the loan will become less.
In order to understand how it is more profitable to repay a mortgage ahead of schedule, it is worth considering the situation when a loan of twelve percent in the amount of one million rubles was taken to purchase real estate. Payment begins in March. For example, in September, the borrower is given a premium of sixty thousand, and he decides to pay off some of the mortgage with it. In the event that he chooses to shorten the term after early term, he will receive a benefit of almost forty thousand rubles.
Methods and tips: reducing the amount
Now we will consider whether it is profitable to repay a mortgage ahead of schedule in small amounts. The same story with a loan of one million rubles will be with a decrease in the amount. The overpayment will be greater in comparison with the reduction of the term: thirty-one thousand against twenty-nine. Thus, the benefit from an early one-off repayment with a reduction in payment will amount to a little more than seventeen thousand rubles. It turns out that minimizing monthly amounts is not very profitable, but this is not entirely true.
If the contract does not have restrictions on the number of early repayments, then how is it more profitable to early repay the mortgage? In this case, you should continue to make savings every month. This option will be almost equivalent to the previous economically.
A payment system with a reduction in the amount of payment helps, for example, in a difficult financial situation, while reducing the profit of the borrower. Reducing the amount of funds contributed, of course, will help to survive the crisis, not allowing delays. Experts who are familiar with family finances advise when there is a choice for which period it is more profitable to take a mortgage as part of an early repayment, you should adhere to the following strategy:
- Take as much as possible.
- As part of the first opportunity to pay early.
After all, it’s better to be in the ownership of an apartment, even if you overpay ten thousand more than to risk your only place for housing after a personal, albeit temporary financial crisis.
Early repayment tips
Choosing how best to pay such a loan ahead of schedule should be based on the situation: personal and family. You should also pay attention to inflation in the country (whether money will depreciate). Against the background of its high level, it becomes clear why it is not profitable to pay off the mortgage ahead of schedule, in this case it is better to purchase goods by equipping the apartment.
If there are no restrictions on early maximum payments, then absolutely any option will do: from an economic point of view, this is practically the same. True, it is better to agree to a reduction in the size of the payment, and then each month invest the savings in advance payment.
When there is a restriction on early repayment, it will be more profitable to reduce the time. It is economically more efficient. If the family is likely to reduce profitability in the coming years, then it is better to reduce the payment. The first time, let’s say, extra money should be paid for ahead of schedule, reducing the transfer, and in a difficult period to pay a small amount.
It will be useful to take into account your character. If a client is an optimist in life and is not afraid to lose his job, then after an early repayment it is necessary to shorten the term. And when the glass is half empty, it is necessary to reduce the amount of payment.
Thus, it is impossible to say unequivocally how profitable it is to take a mortgage if you pay off ahead of schedule, and also what will be more profitable if it is paid off ahead of schedule: reduction of term or transfers. It is necessary to approach each situation individually and evaluate personal priorities with a financial situation.
When is it better to repay a loan ahead of schedule?
In the event that the loan was selected for a long period, it is advisable to pay the first repayment in the first year. Next, we consider whether it is profitable to repay a mortgage ahead of schedule. For example, if in the example described earlier the client makes an early payment not in September, but in June (three months earlier), then with a shorter period the overpayment will be two hundred ninety-two thousand (against two hundred ninety-four). The savings in the end will be about two thousand rubles.
When every thousand overpayments are expensive for the client, it is advisable to pay off the debt as quickly as the situation and the agreement with the financial institution allow. For example, Sberbank prescribes that early termination is possible only three months after the first transfer. After all, the organization is unprofitable quick payment of the loan. It must be remembered that the earlier the date for an early payment arrives, the sooner the remaining debt will decrease. And the lower it is, the lower the percentage as a result.
Small amounts
In the case when early repayment of the debt is not carried out all at once, but only in small amounts, then within the framework of concluding an additional contract in a financial organization, payers are faced with a choice. How is it more profitable to repay a mortgage ahead of schedule: with a decrease in the amount of the minimum amount deposited or with a reduction in the payment period.
It should be noted right away that in both situations the amount of overpayment with other parameters of the loan will be the same; in this connection, choose the option that is more convenient. Recalculation is performed according to special formulas, but it is easier to use programs that help to instantly calculate the future amount, in fact, for this you need to enter only the source data. Now we learn about how it is more profitable to early repay a mortgage in a leading bank in the country. And is it worth it?
Is it profitable to prematurely close a mortgage loan in Sberbank?
Loan repayment schemes have their own characteristics, which are always described in the relevant clauses of the contract. Below we describe the case when it is more profitable to partially repay a mortgage ahead of schedule. So, in the framework of the differentiated schedule, after the premature partial cancellation as early as next month, clients feel a decrease in the debt burden and a decrease in payments due to a reduction in interest charges. With an annuity, payment is also recounted downward, but its decrease is not so noticeable.
Both situations lead to approximately the same abolition of the load and minimize the calculation of interest payments. The only big difference is that according to the annuity, they are recounted according to a special formula for early disposal of debt. It distributes the load so that the remaining period the client continues to pay for the loan with the same transfers, but in a reduced amount. You can ask for a new schedule to be printed at any time at the nearest bank office.
Thus, we answered the question of whether it is profitable to early repay a mortgage in Sberbank. With differentiated schemes in this institution, premature repayment with a shorter period is a good opportunity to fine the unlimited right to own one’s living space without penalty and hassle.
Is it possible to close a housing loan in Sberbank ahead of schedule in full? How?
A step-by-step instruction that helps in resolving the issue of how it is more profitable to repay a mortgage ahead of schedule in Sberbank, as well as helping to free yourself and your property from mortgage troubles in this bank, is quite simple. This requires:
- Accumulate the required amount of money. This is the most difficult step within the framework of a constant credit load.
- Thirty days before payment, you need to go to a branch of a financial institution or go to Sberbank online to determine the day and amount of the last payment.
- Then they submit an application for complete repayment of the loan with the date, account number from which funds will be debited, and the amount of payment. This paper will be printed out to the client and help fill out by employees of the Sberbank branch. It is better to contact the office once again, so that later there will be no problems with the amount of early repayment.
- In the selected period, the loan is fully repaid.
- Receiving a long-awaited certificate from Sberbank with confirmation of full payment of the contract.
- Remove the burden in Rosreestr from the apartment.
In practice, the human factor often leads to very unexpected events. The full debt payment letter does not guarantee the fulfillment of these facts. Therefore, after a month, you need to call employees and ask them to look again at the program so that they confirm full repayment.
At VTB
Borrowers have the right to make an additional amount of funds for any type of mortgage agreement that was not taken into account in the planned calculation of payments for the use of credit (including interest).
This bank allows partial and full early repayment. To do this, you need to write a notification stating information about the date of the next transfer of funds for which interest will not be charged.
An application is best filed per day. According to the conditions imposed by the banking organization, customers are obliged to send a notice until six in the evening the day before payment. It is necessary to monitor the correctness of the indicated date, because if there is an error or if the deadline is not met (the main thing is to submit paper in one day) the operation will not be carried out and, accordingly, the interest on the debt for early repayment will not be taken into account.
After the payer makes a partial early payment, the remaining amount of the debt will be counted for the next period. When it comes to full repayment, you must contact the organization in advance (again within 24 hours), draw up a statement and indicate all the necessary information as correctly and carefully as possible, then transfer the application and make the payment on time.
It is recommended that before transferring money against contractual obligations to clarify with employees of a financial institution whether an application has been accepted and whether it is currently possible to carry out early mortgage repayment at VTB24 Bank.
Why is it beneficial to repay a loan for real estate in VTB?
The fact is that after the full payment of the entire necessary amount, the encumbrance is removed from the property. The earlier the money is paid by agreement (the loan body is paid), the lower the interest. But there are some disadvantages, for example, the fact that inflation has a positive effect on the amount of refund. Early repayment is carried out in this organization in the following ways:
- Contacting the bank and writing an application for early cancellation.
- In automatic mode, using the operator from the call center.
Another important feature of early repayment of mortgages at VTB is the ability to choose where to write off the written-off money. You can use them to reduce the terms of the loan or reduce the monthly payment. In order to understand how it is more profitable to repay a mortgage ahead of schedule in VTB, customers should use a special calculator. To make calculations of both options at once and make the most profitable decision.
These are the main subtleties and features for the repayment of funds for real estate ahead of schedule. I must say that the most problematic, but at the same time incomprehensible to ordinary people option is an early partial repayment. Absolute return is easier to understand and makes it possible to immediately remove property from encumbrance, making full settlements with the bank.