How to Pay Off a Mortgage Quickly

How best to make a partial early repayment of a mortgage loan

Most banks provide mortgage loans with an annuity loan repayment scheme. This means that the borrower makes the same amount of payments each month during the entire term of the loan. In accordance with the credit schedule, in the first years only the interest is paid by the borrower, and the basis of the loan debt decreases slightly. Only about the middle of the term amounts to pay the principal and interest become equal.
What is more profitable with partial repayment of mortgage debt - to reduce the amount or term of the loan?
When the borrower is ready to make an early partial repayment of the mortgage loan, banks offer two ways:
- reduction of the monthly fee;
- reduction of the loan period.
When choosing the first method of CHDG, a credit institution reduces the monthly installment on a mortgage loan.At the same time, the loan period is maintained.
The second method is aimed at reducing the term of mortgage lending while maintaining the size of the amount of the monthly installment on the loan.
More profitable is the first method of CHDG: the borrower has released money, which affects the state budget of the borrower. With any method of ChDG, the bank must necessarily present to the client a recalculated schedule for the repayment of the mortgage loan.
It is unprofitable for banks to execute operations for early repayment of mortgage loans. Therefore, when concluding a mortgage agreement, the borrower should study the conditions set by the credit institution for partial repayment of the loan debt. Often, the contract with ChDG stipulates a reduction in the term, but at the same time the amount of monthly installments remains unchanged.

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How best to make a partial early repayment of a mortgage loan

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How best to make a partial early repayment of a mortgage loan

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