2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16
Everyone who purchased a home with credit funds is wondering: how to pay off the mortgage faster? After all, 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 renewal payments and other financial injections into newly acquired housing creates a desire to pay off mortgage debt as quickly as possible.
Monthly Payment Schemes
Whether certain mortgage programs are profitable is determined not only by a good annual percentage 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 throughout the loan term. But do not assume that the payment consists of equal halves: the principal and interest for its use.
Example, a mortgage agreement is concluded for 20-25 years, and for the first 13-15 years, almost the entire monthly paymentwill consist of accrued interest, but the body of the loan itself will undergo little change. How to quickly pay off a mortgage under an annuity scheme? No way. The bank, even under the condition of early payment of the mortgage, will demand its interest from the borrower. Thus, protecting yourself from losses and ensuring maximum income.
Differentiated Schema
Monthly payments are uneven. The first payments are quite large, but gradually decrease and no longer burden the borrower so much. And if, already at the time of registration, the borrower is thinking about how to repay the mortgage faster, then it is best for him to use this option.
The differentiated payment consists of equal parts of the body of the debt and accrued interest. And if the mortgage is paid off ahead of schedule, there is a proportional decrease in the amount.
Paying such monthly payments for almost all borrowers is an overwhelming task, so annuity payments are chosen. After all, most banks do not give the borrower the right to choose, by default using an annuity scheme.
When repaying the debt by an annuity scheme in the first 10-15 years ahead of schedule, the amount of the principal debt does not change much. With a differentiated scheme, early repayment can be made at any time. The proposed mortgage programs should be carefully considered in order to calculate all the risks in a timely manner. After all, nothing can be changed in the process of paying off the debt.
Refinancing is a way to quickly pay off your mortgage
Use refinancing programsnot only if it is impossible to pay the debt in the future. A loan issued at another bank to pay off the current mortgage can significantly reduce the repayment period. The only big disadvantage of refinancing is the appearance of rights to this housing as collateral (Chapter 4 and Chapter 6 of the Mortgage Law).
If the borrower used refinancing only to relieve housing from encumbrance, then this should not be done. Housing and mortgage, and refinancing will be used as collateral. In general, the borrower, if the balance of his mortgage debt does not exceed 700 thousand rubles, it is best to get a consumer loan and pay off the remaining debt.
Bank conditions for early mortgage repayment
Before you make early repayment of the mortgage, you need to study the section about this in the loan agreement to understand how profitable it will be. There is an article in the law "On Protection of Consumer Rights" from which it follows that the bank does not have the right 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 of the Russian Federation states that the borrower can fully repay the debt ahead of schedule, but with the consent of the creditor. At the same time, the question remains whether the bank has the right to charge additional fees for early repayment from the borrower.
Court practice on this topic contains decisions when both the borrower and the lender won. Some banks oblige the borrower for 1a month before the expected date of full repayment of the mortgage, notify them in writing.
Can I repay a mortgage with maternity capital?
The first step for early repayment of a mortgage with the help of maternity capital will be the submission of an application to the Pension Fund from the owner of the certificate. It contains all the data of the holder, and also explains what it is planned to spend the money on. The application must be accompanied by a package of documents consisting of:
- maternity capital certificate;
- certificate holder's passport;
- copies of the mortgage agreement;
- certificate from the bank, which indicates the amount of principal and interest on the loan;
- copies of the certificate of state registration of the right to the acquired property;
- a notarized commitment in which the borrower undertakes to allocate shares in the purchased housing for children and spouse/guy.
If the mortgage was issued to the spouse of the certificate holder, then you will additionally need to provide his passport and marriage certificate.
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 repay the mortgage with maternity capital.
Tax deduction and mortgage
With the help of a tax deduction, you can also partially or fully repay your mortgage. Each of the citizens of the Russian Federation has the right when acquiring real estatebe able to partially recover the previously paid taxes. This is a property deduction. 13% of the amount of mortgage debt is calculated. The borrower has the right to receive a tax deduction that 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 repay the mortgage faster, you can resort to the following tips.
It is necessary to carefully analyze the income and expenses received. After reviewing your expenses, you need to decide which ones you can give up so that the money you save can be used to pay off your mortgage every month. For example, stop drinking coffee from vending machines and eating at public catering. And do not buy various unnecessary little things.
How else can you pay off your mortgage early?
Another way to pay off your mortgage quickly is to take on extra work. You can do tutoring or consulting, writing texts or manual work.
And if you add another 10% to the monthly payment, this will also allow you to answer positively the question of whether it is possible to repay the mortgage ahead of schedule. You just need to know the scheme, thanks to which loan payments will be made more correctly. Example, having several loans (consumer loan, credit card), the borrower should pay off the smallest loan first. 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 smallest to largest. After othersloans will be closed, there will be more free funds that the borrower must use to pay off the mortgage. Such a significant increase will also serve as an option to pay off the mortgage faster.
In what order should loans be paid?
Having several loans, it would be more expedient for a borrower to repay those loans with the highest annual interest rate first. It must be remembered that for all loans it is necessary to pay the monthly payment on time and in full. Do not allow the formation of fines and pen alties: after all, these are extra expenses and, as a result, delaying the deadline for paying off the main debt - the mortgage.
After paying off the most "expensive" loans, you should start paying off 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 he alth and life. Can you pay off your mortgage early with insurance? Alternatively, you can terminate the insurance contract after the loan has been signed. But this should be done only if the borrower is completely sure that after such a step the bank will require him to repay the mortgage early. 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 claim with the court. After all, this is a violation of the loan agreement.
When concluding a loan agreement, you must know in advance for what period of time the lender obliges histhe borrower to insure the property. If the contract states that insurance must 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 obliged to take out an insurance policy once, this will be an option to pay off the mortgage faster.
Insurance is issued for a period of 1 to 5 years. After the expiration of the line of the insurance contract, it must be renewed. But if the contract does not say that the insurance needs to be extended, the borrower is not required to do so. After all, there is no such clause in the signed document.
Recommended:
How profitable to pay off the mortgage early: methods and useful tips
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. A lot of questions immediately arise 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 pay them in full or deposit in small amounts?
Which bank gives a mortgage on a room: lists of banks, mortgage conditions, a package of documents, terms of consideration, payment and the amount of the mortgage loan rate
Your own housing is a necessity, but not everyone has it. Since apartment prices are high, when choosing a prestigious area, a large area and the cost increases markedly. Sometimes it is better to buy a room, which will be somewhat cheaper. This procedure has its own characteristics. Which banks give a mortgage on a room, is described in the article
Mortgage in Germany: choice of real estate, conditions for obtaining a mortgage, necessary documents, conclusion of an agreement with a bank, mortgage rate, terms of consideration and repayment rules
Many people are thinking about buying a home abroad. Someone might think that this is unrealistic, because prices for apartments and houses abroad are too high, by our standards. It's a delusion! Take, for example, a mortgage in Germany. This country has one of the lowest interest rates in all of Europe. And since the topic is interesting, you should consider it in more detail, as well as consider in detail the process of obtaining a home loan
How to pay off a Sberbank credit card: grace period, interest accrual, early loan repayment and conditions for debt repayment
Credit cards today are very popular among bank customers. It is easy to issue such a payment instrument. You don't always need proof of income. It is also easy to use borrowed funds. But, like any loan, the spent credit card limit will have to be returned to the bank. If you do not have time to repay the debt during the grace period, the burden of paying interest falls on the holder. Therefore, the question of how to pay off a Sberbank credit card in full is quite relevant
Write-off of receivables in tax accounting: write-off procedure, correctness of registration and examples with samples
The write-off of receivables is a standard procedure in the life of any organization. Therefore, it is important to know about it, its order and reasons for conducting it. It is this knowledge that will help to avoid unpleasant consequences. The article will tell about the procedure
