The mortgage has allowed housing issues to be solved for thousands of Russian families, but the need to pay interest on the use of borrowed funds makes it necessary to look at ways of early closing the debt to the bank. If the financial situation allows, the borrower to make payments more profitable in a larger volume, the overpayment decreases and future costs decrease. As in any other financial institution, Good Finance provides an opportunity to repay mortgage debt out of schedule. Early repayment of a mortgage in Good Finance may be carried out in part or in full.
How reasonable is it?
Despite the desire to quickly get rid of credit debt, depending on the payment calculation method, the benefit from early repayment will be different:
- in case of differentiated payments, with each payment exceeding the amount indicated in the schedule, the percentage overpayment will decrease, and the new payment will automatically decrease after recalculation along with the decrease in the main debt;
- with an annuity payment, the amount of monthly installments is fixed, and the interest overpayment is distributed over the entire period of the contract in such a way that in the first half of the loan the interest is paid off predominantly, while the loan body decreases almost imperceptibly.
With differentiated calculations, the advantages of early repayment are obvious – after an extraordinary repayment above the scheduled amount, the debt to the bank is reduced by this amount, which means that in the next month the overpayment will be less. The repayment pattern remains transparent – the larger the payment, the shorter the repayment term and the interest accrued.
With annuity payments, there are doubts whether it is profitable to deposit funds in advance if the overpayment is already taken into account and distributed in the schedule. The fact is that the payment on a mortgage over and above the schedule at annuity, at partial repayment, will be deducted from the principal amount of the debt, but in the future to new distribution of interest overpayment for the remaining remaining term is made. As a result, the benefit in case of annuity is not significant, especially in the second half of the loan period, when a large percentage of interest has already been paid.
Moreover, due to inflation every year, the real cost of a loan becomes lower due to the depreciation of the ruble. Partial repayment of annuity payments will annually reduce the amount on which interest is charged, ultimately reducing the amount of the monthly payment or reducing the term.
Due to the complexity of calculating new payments with equal mortgage payments, a number of restrictions on early repayment arise, without which the amount paid in excess of the schedule can not be deducted from the principal debt. For annuity payments, there is a special procedure for conducting and offsetting early repayment:
- Reduction of the loan period while maintaining the amount of the monthly installment, which ultimately leads to a decrease in interest charged.
- Reduced credit burden while maintaining maturity. Despite the fact that the overpayment is reduced to a lesser extent, this option may be very demanding for families, which, due to the deterioration of their financial position, had difficulty servicing their former debt.
A stable early repayment with small amounts in excess of the calculated payments would be optimal, but this is not always possible – certain minimum limits are established, below which the bank will not credit funds.
Early repayment in parts, when payment is difficult to maintain on a monthly basis, will ease the financial burden of the payer, if there is any opportunity to attract additional sources of income, large receipts, bonuses, etc., just a few of these contributions will make the borrower’s expenses acceptable, not restricting the family budget before the expiration of the contract. Having chosen a reduction in the payment term once, the borrower has the right to apply to the bank with a request to reduce the amount of the payment upon the next advance payment.
Before contacting Good Finance in 2019 with a request for early repayment, it is necessary to find out the type of calculation of payments established under a particular loan agreement and clarify the specifics of the procedure.
Allow you to pay off your mortgage ahead of schedule?
Since for every financial institution mortgage is a source of profit over several years, early repayment is an undesirable step leading to a decrease in the lender’s income. On the one hand, the financial institution successfully makes an additional return of interest along with the principal loan, on the other hand, the bank does not receive the planned profit according to the contract. This may cause a negative reaction to the corresponding entry in the CII.
Good Finance has the following rules for early mortgage payment with annuity settlement:
- The loan term does not change, keeping the bank a part of the interest income for the remaining period. Reducing the amount of debt affects only the amount of regular payments to the borrower.
- Advance payments work from the first monthly payment.
- Offset of payment over the schedule occurs the next day after the borrower writes an application at the bank branch, or after completing the transaction via the Personal Account in the Internet Bank.
- For a long time, the minimum payment for annuity schemes out of schedule was limited to a threshold of 15 thousand rubles, but at the moment this condition is not put forward.
- The maximum amount may be limited only by the balance of the debt to the creditor.
- Write-off of funds in excess of what is set on schedule, comes from a bank account opened to service the mortgage. If for any reason a certain amount is missing in the account, Good Finance may try to debit funds from additional accounts, and if they are not available, the payment will be canceled.
- Partial early repayment of the mortgage in Good Finance does not exempt the borrower from the next regular payment, but the amount due will be recalculated due to a decrease in the balance.
- An additional fee does not include penalties.
Good Finance allows the use of a non-cash method of crediting funds to an account using or from a personal account in Good Finance Online. Subsequently, after the withdrawal of funds, subsequent payments will be determined in the new schedule.
The procedure for early repayment of a mortgage loan
If you intend to reduce the amount of debt outside the current schedule, there is a certain sequence of actions that is adjusted for the repayment option – partial or full.
Regardless of the amount contributed, Good Finance’s mortgage client operates in the following sequence:
- Before repaying a mortgage ahead of time, you should carefully calculate the possible benefits of reducing the value of the debt and assess the feasibility of this operation. An online calculator posted on the lender’s online resource will help in calculating savings. If you have difficulties with counting, you can ask the help of an employee in the bank branch. Depending on the goal pursued, the mortgage owner assesses the benefit by interest overpayment, the degree of reduction in monthly installments, and the possible consequences from a financial point of view.
- A representative of the bank will be notified about the upcoming procedure outside the current schedule and issue an official statement asking to set off a payment to reduce the principal debt.
- By the appointed date, the client deposits funds into the bank account used to service the mortgage.
- After the cancellation at the Good Finance branch, a new schedule is received, in which the adjusted conditions for further payments are indicated.
There are some differences between full and partial repayment given the need or absence of the formal closure and documenting debt closure.
Current conditions for partial early repayment no longer require adherence to a three-month “moratorium” on repayments and limit the minimum amount. You can pay any available amount that the mortgage debtor can afford. The main condition is the presence of a sufficient amount on the account by the time of the planned additional debit. For depositing funds, Good Finance Online, an ATM, or a bank cash desk can be used.
The reason for the early cancellation of part of the mortgage is an official appeal to an employee of a financial institution using an application submitted in person, or an order from the Personal Account.
In a statement, the mortgage payer asks for recalculation of further contributions after the completion of the account out of schedule is credited. If necessary, the statement reflects the accounting of part of the funds for the repayment of the next regular contribution after recalculation. Payment through the Personal Account of the Good Finance application also does not limit the amount of replenishment – from partial to complete debt closure.
To make a partial repayment via the Internet, proceed as follows:
- Authorization in the system “Good Finance Online”.
- Go to the early repayment tab in the loan operations section.
- Formation of the request according to the required parameters in the online form.
- Selecting a debit source (linked bank account, any card issued by a bank).
- Determining the date of extraordinary debiting.
- Go to the link design application.
- After checking the date in the request, the operation is confirmed via SMS-password.
You can find out the exact amount of the next payment via the Internet only after offsetting the funds and reducing the amount of the remaining debt.
An important detail when making an additional write-off is that the reduction of the debt entails to decrease in the monthly credit burden, while the reduction of the term occurs only when the credit line is completely closed.