Russia (bbabo.net), - Mortgage is a loan product that requires extreme responsibility. Many seek to pay off such debt ahead of schedule, not only because they want to own their housing and remove the burden, but also to get rid of psychological pressure. Olga Daineko, an expert at the Center for Financial Literacy of the NIFI of the Russian Ministry of Finance, told Rossiyskaya Gazeta how to do this correctly.
Repay in installments
The mortgage can be repaid early in installments or in full. Early partial repayment of the mortgage allows you to reduce the amount of the principal debt, and with it the total overpayment of interest. To formalize the partial repayment of the debt, it is necessary to fill out an application at the bank when depositing money, in which, among other things, indicate the amount to be repaid, Daineko notes. If you just put money into the account, then they will continue to be debited according to the schedule of current payments. Often such an application can be made remotely through the application or Internet banking.With partial early repayment, you can either reduce the amount of the monthly payment or shorten the loan term. Reducing the term allows you to reduce the amount of the overpayment, and with a decrease in the monthly payment, the overall financial burden of the borrower decreases. You can choose to reduce the payment and provide yourself with a certain guarantee of solvency in difficult times, but continue to pay the same amount as before (part will go to the mandatory payment, and part to early repayment upon application). This will gradually reduce the monthly payment and in the future close the mortgage earlier, says Daineko. "But for this, it is necessary that the contract does not have minimum restrictions on the amount of early repayment (for example, at least 40% of the payment). A nice bonus of early partial repayment will be a reduction in the cost of insurance. To reduce the tariff, according to the law, it is required to repay 30% of the debt , but most insurance companies are loyal to customers in this matter - just the mortgage balance is taken into account in the calculation of insurance, "says the expert.
Repay in full
When the mortgage is fully repaid, the entire remaining amount of the debt and interest accrued after the last payment is deposited into the account. The mortgage is issued to the (former already) borrower, the encumbrance from the property is removed."We must not forget that if maternity capital was used to repay the mortgage, it will be necessary to allocate shares in the apartment to family members. According to the law, the shares must be allocated within 6 months after the loan is repaid. This must be done after how the encumbrance from the real estate will be removed. Shares are allocated to family members who are available at the time of the allocation of shares. For example, only two children were indicated in the obligation to allocate shares, and at the time the shares were allocated, there were three children - the third child also needs to be allocated a share, "says Daineko.
When is it profitable to pay off the mortgage ahead of schedule
Mortgage payments are usually annuity. The payment is the same every month, it consists of a proportion of the amount to repay the principal and interest. In the first half of the loan term, in proportion to the payment, there is more interest (the principal debt is paid off slowly), and closer to the end of the term, the principal debt is mainly repaid. Based on this, it is more profitable to pay off a mortgage in the first half of the term than in the second (if inflation is not taken into account)."In an effort to pay off a mortgage loan as soon as possible, remember that you should not do this to the detriment of your health, normal rest, education for yourself and your family members. The choice of an early repayment strategy must be approached consciously - to reduce the debt burden without an extreme decrease in the quality of life", - advises Daineko.
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