Have you ever thought about paying off your mortgage in advance? Following a question by Nicolas-Gilles on the subject, I think the issue may involve more than one. Given the current prices of real estate, you may be considering committing yourself for a very long time, imagining why not prepay a portion or all of the outstanding sum. A few years ago I bought a house sold soon after with a capital gain. Here are the points which I had paid attention on the early repayment of my loan.
Define your goals. As with any financial investment, and buy your home is an investment, you must first define your goals. Do you buy a family home in which you hope to end your days? Imagine you do not stay more than 10 years in the home you buy? -Is that your job situation may change quickly in the coming years, allowing you to repay your loan faster? You must have a clear idea of your needs, developments likely to choose the most suitable loan, with the visibility you have.
Know negotiate from the start. When you buy your home, you have many things to manage: visits, relocation, notary, among others … and your credit. Be sure to read the clauses in the event of early repayment. Do not say you do not have time. Repay earlier means less interest payments and therefore a financial loss to your credit from the original contract. That’s why sometimes there are penalties associated with early repayment, either partial or total. Consider your goals to see if it is not better to choose a contract with prepayments without charge, even if the overall cost of credit seems a priori higher. Simulate a realistic repayment before making your choice.
Choose the right timing. Early in the life of your loan, you have to pay a large sum and a lot of interest payable on that amount. The principle of credit is the amount of your monthly payments remain the same at the beginning your repayments include a large share of interest payments and a small portion of loan repayment. If you take a very long credit, after a few years, you will find that you have not paid much. It is better to make larger prepayments at the beginning of your credit, if you can. This will give you years of less interest to pay on the amount prepaid.
Looking for the best value. As always in credit, you must look at the total cost to make your decision. Do not tell that it would be nice to have less than 100 euros to be paid in monthly loan repayment, taking advantage of such an exceptional bonus to pay down your credit in advance. Instead, look what is the best performance you can get with that amount. If your credit rate is low, you will win probably more to invest this amount on your contract of life insurance for example. Especially since earned 100 euros a month might be spent without you noticing you.
In summary, you should ask several questions about the redemption of all or part of your mortgage. Some before they make the investment, others at the time the redemption is possible. Always keeping in mind your overall investment portfolio. Perhaps you have also been faced with a prepayment of mortgage? Ya-til after you have other issues on which to be vigilant?