Sometimes paying off your mortgage early may not be beneficial. This is the opinion in a conversation with Lenta.ru expressed finance and investment expert Evan Golovanov.
The expert explained that initially most of the mortgage payment is covered by interest and a smaller part by the principal debt, but over time the ratio changes. In other words, a large part of the payment goes to repayment of the principal debt, and a smaller part goes to interest payment.
“If a person has the means to repay the loan in full, especially in the early stages of the mortgage, this is a perfectly acceptable option. However, it is worth noting that if a person is in the final stages of the mortgage, for example after 7 years of payments, then the full repayment is financially it may not be that profitable,” Golovanov concluded.
According to him, after seven years the bank has already paid a significant part of all interest. Accordingly, in this case, paying the full mortgage loan amount actually means using your own money to pay the interest already paid.
The expert recommended investing this money, for example, in federal loan bonds that provide an annual return of 12%.
Golovanov explained that partial repayment of the loan entails paying only part of the amount, not the entire amount. For example, if the borrower received a bonus for a job and wants to reduce interest payments, he can reduce the size of the monthly payment or shorten the term of the loan.
In the second case, the person pays less interest over time, but the monthly payments will be larger. In the first case, the maturity of the loan will not change, but the balance of the principal debt will decrease slightly. Golovanov believes that if the borrower’s goal is to reduce the financial burden on the family, it is better to reduce the payment amount. With a stable financial situation, it is more profitable to shorten the loan term.
Russians’ demand for secondary apartments increased in October. It increased by 15% compared to September and 46.8% compared to June. reported Director of the federal real estate company “Etazhi” Ildar Khusainov. According to him, Russians now want to find apartments in order to sign a loan contract under the conditions approved before the increase in mortgage interest rates.
Previously “socialbites.ca” reportedIt is now more difficult to get a mortgage in Russia.