Let’s begin the articles on How to Pay Home Loans earlier and today we will analyze the impact of small monthly installments. There is no difficulty in realizing that small capital repayments every month allow you to get considerable savings on interest over the entire term of the loan.
It is also necessary to understand that this type of amortization is not so flexible and, as a general rule, it is not easy to do, since for banks, accepting monthly repayments and assuring the same amount of monthly payment, means making changes to the initial contract and also have a computer system capable of updating the term according to the new capital and the installment.
Basically, this strategy only has a great impact if it were possible to set the amount of the benefit that is paying, that is, if you pay 400 euros of benefit and amortiza for 12 months 100 euros monthly to the capital the result would be to pay a benefit of less than 400 euros , however, his desire is to keep the 400 euros in installment.
However, this article will contribute to the general knowledge of all of us and will still provide relevant information to determine repayment strategies for your housing credit.
The Greatest Savings
If it were possible to always pay the same installment and amortize monthly, since the only variable that was being updated was the term, we would have the following situation.
This is undoubtedly the strategy of early amortization that brings greater savings to the consumer. Small monthly contributions represent thousands of euros per month in savings.
This type of strategy will not be easy to achieve with banks, but it will gather relevant information and encourage savings. Saving 50 to 100 per month to subsequently amortize housing credit means saving hundreds of euros.
The most common
As in the generality of the credit housing the updating of the value of the installment as a function of the capital in debt is most likely to happen. This event allows us to determine the following table:
This investment strategy is possible to realize with some ease provided that this intention is announced in advance ( 7 days in advance for each amortization ). However, you should consult your bank and find out if there is any possibility of repaying any amount or if there are minimums.
This type of situation saves a lot of money over the entire period of credit, however, does not allow reducing the number of years of credit and get rid of debt as soon as possible. To get rid of the credit you will have to ask the bank for an update of the term depending on the benefit you want to keep.
Although the largest savings solution is out of our reach it allows us to conclude that it is possible to repay the housing loan earlier and save a lot of money on the interest. The second hypothesis is more likely to happen and should be applied strictly, ie communicate seven days in advance of each amortization and at least once a year update the term in order to maintain the original installment.
This strategy can also be used to create a housing credit fund that can be used to pay off your credit and, when it is being amortized, request an update of the term in order to maintain the performance you have been hitherto supported. You can reduce your benefits and improve your quality of life. Just follow some of our simple rules.