Interested in paying off the mortgage now?

Banking sources acknowledge that during September, questions from clients about the impact of rate hikes on mortgages increased. But some time ago, bank employees stopped being impartial advisers to their clients as a result of the current pressure on the workforce. Also, each person’s financial situation differs greatly and impossible to make recipes available to everyone. These are some tips for assessing whether it’s appropriate to repay a mortgage in the context of hyperinflation:

Pay it off or not, it’s the lucky ones’ dilemma

It’s obvious but must have money to repay the mortgage in cash in the account of the enterprise. The second element is to control the effectiveness of this depreciation in the family budget and the life of the loan. Current interest rate hike signals paying off a mortgage if the applied differential is high (more than 0.5% impact is significant) and if the loan is at the end of its life. For example, on a mortgage with 120,000 Euros due and 15 years left, partial amortization will have a relatively moderate effect. A contribution of 50,000 euros can be applied to reduce the duration by about five years or to reduce the fee from 850 (Euribor plus 0.4%) to just over 200 euros per month. On the other hand, in the case of EUR 18,000 outstanding and a mortgage with less than 10 years remaining and paid more than EUR 500 per month, these savings should be liquidated if they are present in the account. A visit to the bank is mandatory to see the impact of each decision, but in general worth less than five years for total depreciation Repayment of outstanding debts with the expectation that rates will continue to be higher in the coming years. In any case, the type of loan signed will depend on whether it is appropriate to repay the debt.

Banks now have more money

assets they will try to keep the mortgage balance alive in current conditions. Spanish banks generally have a lot of money, so they are in no rush to charge their bank accounts. They generally prefer customers to receive credit or services. Fixed mortgage rates have already mostly exceeded 2.85% and will soon approach 3%. Spanish banks are presumed to have it. in the piggy bank ECB estimated at 1.15 trillion Euros (millions of millions). In these conditions, they have excessive liquidity. Although the deposit rate (which banks receive because they hold money in the ECB) is expected to reach 2.5%, experts say there will be a few banks fueling the profitability war for customer deposits. Currently the most active offer returns 1.4% for two years. In the case of Renaultbank, putting 500 euros and forgetting that money until two years later would mean getting 524 after 24 months.

Bad time for the stock market and aggressive funds

Markets are in turmoil amid inflation, interest rate hikes, recession risk, the war in Ukraine, energy instability and the microchip crisis. In these circumstances, Barclays advised institutional investors (large trending investors) to hold their ‘cash’ positions. prioritize cash over leverage (debt). Analysts at the British bank predict stock markets will fall and recommend prioritizing fixed income. Spanish banks offer returns of 3.5% per year on fixed income funds for three years.

supply and diversification

Businesses offer all kinds of products to their customers. From health policies to insurance. Medium risk mutual funds are offered, but pursuit of superior returns requires investment in stocks. And no one can guarantee future returns based on what has happened in recent months. The recipe is almost always to diversify the risks. Experts recommend diversifying the investment, given the impossibility of generating returns.

Personalized investment plans

With the amendment made in the pension plans regulation, where annual contributions are still limited to 1,500 Euros per year, alternative long-term savings plans have gained importance. In Spain, contributions to pension plans and Insured Foresight Plans (PPA) may be reduced in the general tax base of personal income tax (IRPF), with absolute limits and depending on the volume of income work and/or economic activity. The current 1,500 Euro limit (before 8,000) on contributions to individual pension scheme systems has increased other solution offerings in organizations. These are Long Term Individual Savings Insurance (SIALP) and Individual Systematic Savings Plans (PIAS). Both systems are indicated for long-term savings. If they’re over 50, they don’t attract attention..

Banks often offer clients PIAS tailored to the three main types of savers, with investment portfolios classified according to their default risk profile (medium, dynamic, or aggressive) depending on whether they invest more, long-term, or more or less in short-term fixed income. stocks. The advantage of PIAS, which is also provided through an insurance contract, exemption from taxation of retained earnings provided that the benefit is received in the form of a lifetime allowance and other conditions required by law are met. In addition, lifetime income will depend on the age of the recipient at the time the income is generated and will benefit from a reduced tax percentage that can reach 92%.

super protectors

In general, retirement or savings plans, as another form of diversification, are of interest only to those with a high saving capacity. Perhaps the most interesting thing is to save independently, choose a paid bank account and deposit a fixed amount every month. It might also be interesting to allocate a small portion to high-risk investments (some stocks and even cryptocurrencies). For OCU, middle- and low-income citizens must have no more than three months’ salary equivalent at the bank in their checking account. But in home economics, general prescriptions tend to be uncertain and future expenses are unpredictable.