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Is it currently cost-effective to repay the mortgage in advance?

Time: 2014-06-03         Source: Rong 360 finishing         Author: Han Ping

Although the early repayments have been heated up, many people still don't know how to handle them, which is the most cost-effective, and the consulting bank customer service does not understand. In fact, the most cost-effective way to repay is to do everything possible to reduce the principal! Is the current repayment in advance suitable? To this end, 360 Xiaobian helps you to sort out the various strategies for early repayment for reference:

  Who is suitable for early repayment

First, those who are unwilling to have debts and do not want to bear the pressure of excessive living, the key is debt-free.

2. The lender who implemented the floating interest rate at the time of the loan. Affected by changes in the national real estate policy, some customers did not enjoy interest rate concessions when they bought a house, and may even raise interest rates. Such lenders will repay loans in advance, which is relatively cost-effective.

Third, I hope to use the house as a financing tool and obtain more loans from the bank. In recent years, house prices have risen rapidly, and the value of some houses has risen more than at the beginning of the purchase. If the mortgage loans are repaid, the mortgages from the banks can often obtain a larger credit line.

Fourth, the purchase of the house, in the early stages of repayment. Since the loan has just been repaid, the principal base is large and the interest rate is correspondingly high. If there is idle funds on hand, you can repay the loan in advance.

Who does not recommend repaying loans in advance

1. If it is a provident fund loan or a loan at a 30% discount rate, it is not recommended to repay the loan in advance. The existing 5-year deposit interest rate can obviously cover the loan interest.

Second, if the loan is based on a preferential interest rate of 8.5 percent, that is, the loan interest rate is 5.57%, it is not recommended to repay the loan in advance.Bank wealth management productsThe income can generally reach about 5.5%, which basically covers the loan interest. If you repay the loan and buy the house in advance, you will not be able to borrow such cheap money.

Third, if you are running a business at home, you need more liquidity. Generally speaking, the return on investment will be higher than the interest rate of the mortgage. The interest rate of the bank for operating loans is often higher than the interest rate of the mortgage, so there is no need to choose to repay the loan in advance. .

How to repay in advance is cost-effective?
Repaying loans in advance

 
The two most common repayment methods currently used areEqual principal and interest repaymentLaw andEqual principal repaymentlaw. The equal principal and interest repayment method, that is, the borrower repays the loan principal and interest in an equal amount each month. In this way, the interest expense at the initial stage of repayment is the most, and the principal is relatively small. In the future, as the monthly interest expense is gradually reduced, the principal returned will gradually increase. The equal principal repayment method, that is, the borrower repays the loan principal with an equal amount each month, and the interest decreases with the principal month by month, and the monthly repayment amount is also decreased month by month. Under the same loan time, the interest paid by the equal principal and interest repayment method is higher than the equal principal repayment method. Therefore, if you plan to repay in advance, it is best to choose the equal principal repayment method.
 
Repayment in advance is mainly to reduce interest, especially in the first few years of the loan, the principal base is large, and the interest is correspondingly high. Therefore, financial experts suggest that in the first few years of the loan, especially in the first five years, we must strive for more repayments, so that the principal base of the total loan will decrease, and the interest burden will be reduced in the remaining loans.
 
Depending on the method of repayment, the borrower may choose to reduce the amount of time or reduce the amount. It is understood that most banks can provide five ways to repay loans in advance for customers to choose.
The first type, all repayment in advance, that is, the customer will pay off all the remaining loans in one lump sum. (The interest is not repaid, but the interest paid is not refundable)
Second, some of the early repayments, the remaining loans keep the monthly repayment amount unchanged, and the repayment period is shortened. (saving more interest)
The third type, part of the early repayment, the remaining loans will reduce the monthly repayment amount, keeping the repayment period unchanged. (Reduce the monthly burden, but the savings are lower than the second)
The fourth type, part of the early repayment, the remaining loans will reduce the monthly repayment amount, while shortening the repayment period. (saving more interest)
Fifth, the remaining loans keep the total principal unchanged, and only the repayment period is shortened. (monthly increase, reduce some interest, but relatively uneconomical)

Rong 360 experts suggest that in advance repayment, the principal should be reduced as much as possible, and the loan period should be shortened so that the interest on the expenditure is less.
 
How to pay back the loan is cost-effective
If you choose a combination loan of commercial loans and provident fund, there will be a lot of “concessions” for commercial loans. Since the provident fund loan contains the policy subsidy component, the loan interest rate is much lower than that of the commercial loan. The interest rate increase is also smaller than that of the ordinary commercial loan. Therefore, it is relatively cost-effective for the purchaser to return the commercial loan with higher loan interest rate in advance.
 
If you are a pure commercial loan, then there are two differences in the way you repay.
According to expert analysis, compared with the two repayment methods, the interest paid by the “equal principal and interest repayment method” will be higher than the “equal principal repayment method” because the same loan has been loaned for a period of time, and it has already been repaid in advance. The interest paid is non-refundable, which pays a relatively large amount of interest that should not have been paid in advance. Therefore, if there is an intention to repay the loan in advance, it is better to choose the “equal principal repayment method” loan, so it is more cost-effective to repay the loan in advance.
 
However, not all people have to use the "equal principal repayment method" to repay the loan, depending on how your own financial plan is. For those who are highly paid or diversified, you may wish to use the “equal principal repayment method”; if you are now rich in funds and do not plan to repay in advance, I suggest you also use the “equal principal repayment method”. loan. Because this kind of repayment method is more stressful in the early stage, it can alleviate the pressure in the future. It is characterized by the fact that as time goes by, the less repayment, the easier it is. If you are a civil servant, a general teacher, a general researcher, or a person who is working in a stable and uncontested situation, I suggest you choose the "equal principal and interest repayment method."
 
If you are repaying the same amount of principal and interest, then this is basically cost-effective in the first 10 years. Because this type of loan is mostly paid interest at the beginning of repayment, the principal amount is relatively small, and repayment in advance can reduce large interest expenses. Strive for more repayments in the past few years, so that the principal base will fall, thus reducing the interest burden.
 
From the point of view of saving interest, shortening the loan term is a good choice. Because the time is shortened and the monthly repayment amount is the same, the speed of returning the principal is accelerated, and the interest on the expenditure is also reduced.
 
  Bank regulations are different
 
Repaying loans in advance is necessary to clarify the prepayment rules for different banks. At present, banks generally stipulate that after the loan period and one year after the loan is issued, the public may, in writing, apply in advance to return some or all of the loans in advance. The rules for early repayment of loans vary from bank to bank. It is recommended that the public must make clear the operation procedures of the lending bank before making a decision to repay the loan in advance and make an appointment in advance.
 
In the course of the investigation, it was found that, according to the branches, in fact, the right to borrow, the right to operate a lot is in the hands of the branch, and the specific business needs to be carried out with the branch where your loan is located, so the public needs to understand The best way to deal with problems in the early repayment process is to contact the salesperson or account manager who applied for the loan at the time, in accordance with the specific regulations of the branch to which they belong.
 
In addition, the new interest rate after the interest rate hike will be calculated at the beginning of the new year, so even if you want to repay the loan in advance, buyers should seize the opportunity to repay the loan as early as possible at the end of the year before the new interest becomes effective.

       Early repayment mortgage calculator:Http://www.loan78.com/calculator/tiqianhuankuan.html

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