One: Which way is cost-effective?
Usually, when repaying the loan in advance, the bank will provide corresponding plans for reference. Generally speaking, there are three mainstream prepayment methods:
1. Repay all loans in advance and pay off the remaining loans in one lump sum;
2. The monthly payment of the remaining loans remains unchanged, and the repayment period is shortened;
3. The remaining loan term remains unchanged, and the monthly repayment amount is reduced.
Among them, the first one is to repay all loans in advance, which is what we often say, to repay all loans at one time. In this daily operation, there are many cases of resale of houses, so I won't go into details here.
The remaining two ways to repay the loan in advance, is it better to shorten the term? Is it better to reduce the monthly payment? Let's give an example to compare:
Xiaoming bought the first suite in May 2020 with a loan of 1 10,000, and the interest rate was 5.2%. The loan term is 30 years, and the monthly repayment is 549 1 yuan in the form of equal principal and interest. The total interest generated in 30 years is 976,000 yuan.
In May, 2023, Xiaoming had repaid the loan on time for two years and 24 installments. Upon inquiry, * * * has 970,000 pounds of principal and 874,000 pounds of interest still unpaid. With spare money in hand, Xiao Ming plans to pay back 500 thousand in advance. Then he faced a choice:
The first method: the repayment period is unchanged for 30 years, and the monthly payment is reduced.
According to the original repayment plan, Xiaoming repays 549 1 yuan every month. If you take out 500,000 yuan to repay the principal, the repayment period will remain unchanged for 30 years, and it will be repaid in April 2050. Starting from June this year, Xiaoming's monthly payment will become 2659 yuan, less than half of the monthly payment. Due to the decrease in monthly repayment, the total interest expense decreased to 528,654,38+0,000 yuan, a decrease of 447,900 yuan from the original 976,000 yuan.
The second way: keep the monthly repayment unchanged and choose to shorten the loan period.
If the repayment period is shortened, when 500,000 yuan is used to repay the principal, the repayment months will be shortened from 360 to 133. The debts that could have been paid off in April 2050 can be paid off in May 20031year. The interest has also dropped from 976,000 yuan to 225,654.38+0.00 yuan, which is 303,000 yuan less than the interest of 528,654.38+0.00 yuan generated by reducing the monthly repayment amount, which is more than half less. However, the disadvantage is that in the next 1 1 year, the repayment of 549 1 yuan will continue as the original month.
Comprehensive conclusion: from the perspective of saving interest, shortening the loan period is definitely more cost-effective than reducing the monthly payment.
Second: How to treat the difference between these two prepayment methods?
From the perspective of saving interest, shortening the loan period is more cost-effective, and the analysis is actually very simple.
Because, in the early repayment, choosing to shorten the loan period is equivalent to accelerating the repayment cycle of the mortgage. It is natural to pay off the loan earlier and save more interest.
Choosing to reduce the monthly payment, although reducing the pressure of monthly payment and reducing certain interest expenses, has not changed the total repayment amount, and the bank will still charge interest according to the remaining loan amount.
Generally speaking, in the matter of early repayment, as long as we master a core principle: the more principal is repaid, the less interest is saved. Because, every money you borrow from the bank, the interest is based on the occupation of the principal.
But, in theory, it is. In practice, when repaying the loan in advance, we choose to shorten the term or reduce the monthly payment. Still have to do what you can according to your actual situation.
If the income is enough to pay the monthly payment and you simply want to reduce your personal debt, you can choose to shorten the loan period; If the income is average and the monthly payment is difficult, it will be more appropriate to choose a way to reduce the monthly payment.
Third: Additional factors that need to be considered in early repayment.
One of the biggest benefits of prepayment is saving interest, which is especially suitable for buyers with high mortgage interest rate. Although interesting, mice
First, repaying loans in advance ignores the depreciation effect of funds brought by inflation. As we all know, the change brought by time is inflation (currency depreciation). For example, 10,000 RMB ten years ago is equivalent to more than 4,000 RMB now. It is undoubtedly the most glorious to bear certain debts when the currency is constantly depreciating. Therefore, it is a high probability to buy assets that will appreciate in the future with money that will definitely depreciate in the future.
Second, after prepayment, you will lose the opportunity cost of buying a house or reinvesting. In other words, it is easy to repay in advance, but it is difficult to borrow from the bank. Once you pay it back, your cash flow will not work. The whole set is in the house. This will lead to an excellent investment opportunity in the future. When you need some money, you lose.
In fact, cash flow is extremely important, whether it is to resist risks, or to seize opportunities such as investing in stocks and buying a home again. Moreover, after the deposit is used to repay the mortgage, the ability to resist risks in life will also be reduced. For example, if you don't have enough cash flow and face unemployment, will your mortgage default and how will you live? These all need to be considered comprehensively.
In short, early repayment of loans still needs to vary from person to person. I advise you not to blindly follow the trend, and don't just count the small accounts in front of you. We should also take into account our own income level, anti-risk ability, family financial planning and other comprehensive considerations, and strive for the initiative of capital control. Otherwise, a wrong choice may make you lose the chance to change your life. 38660.6886868866 1
Related Q&A: Related Q&A: Is it worthwhile to pay off the loan about 10 years in advance or about 15 years in advance? Nowadays, in the face of such high housing prices, it has become a common thing to choose bank mortgage to buy a house. There may be 99 people out of 100 who buy a house, all of whom choose bank mortgage to buy a house. Some people choose bank mortgage to buy a house even if they can buy a house in full.
Buying a house now is not like 10 years ago. There are many people who choose 5 years and 10 years, but now buyers choose loans of 20 or even 30 years. No way, mainly because the house price is high now, it is inevitable to choose a little more years to share the monthly supply, otherwise even the monthly supply can't afford it.
There are many people around me who haven't planned to return the house for 30 years after buying it. They hope to make a sum of money one day and pay it back at one time. As for five years or 10 or even 15, it's hard to say. After all, sometimes people can make a lot of money in just two years.
In 2065438+2008, I bought a 90-square-meter three-bedroom apartment. At that time, the total house price was 1.58 million, the down payment was 480,000, and the loan amount was 1. 1 million. The mortgage is made through an acquaintance of the bank, and you can choose the lowest interest rate of 4.9%.
I have worked in the society for five years, but I haven't said anything about my career. I am just an ordinary migrant worker. I definitely don't have a down payment of 40,000 to 80,000 yuan in my pocket, and half of the funds are collected by my family to buy a house.
At that time, there were two ways to choose average capital and equal principal and interest for bank mortgage. In the end, I chose the repayment method of equal principal and interest. Nothing, just that I am under too much pressure to choose the repayment method of average capital, and I also know that the interest on the principal will be relatively low.
Loan 1 1000000 yuan, with equal principal and interest, and the monthly repayment amount is 5838 yuan. Assuming that repayment is not made in advance within 30 years, the total repayment interest is 100000 yuan, and the total repayment of principal plus interest is 2.2 million yuan.
If the repayment method in the average capital is selected, the repayment amount in the first month is 7547, which will be divided into 30 years, and the monthly expenses will decrease to 13 yuan, and the total repayment interest for 30 years will be 8 1000, plus the principal 19 1000.
An obvious contrast between the two is that the average capital interest is 290,000 yuan less than the equivalent principal and interest, and the cost will be shared for 30 years, with an average of 6,543.8+0,000 yuan per year.
So what if interest rates are low? However, I don't have the strength myself. I chose the repayment method of average capital and the repayment method of equal principal and interest, both of which were recognized through relationships.
The monthly repayment is 5838 yuan. According to the minimum standards for bank approval, the monthly expenditure should not be higher than 50% of the total income, and the monthly income should be between 6,543,800 yuan and 2,000 yuan. When 2065.438+08 worked overtime, the monthly salary was only 6.5438+0.8 million yuan.
Everyone's concept of mortgage is very different, and my personal concept of mortgage is still within the acceptable range.
Personally, I think mortgage is the money that ordinary people have the longest contact time, the largest amount and the lowest interest, so making good use of this money is a subsidy to their wealth.
It's hard for me to understand why some people choose bank mortgage when they clearly have the funds to buy a house in full. It's not that they don't care about the interest of the bank, but they take a fancy to the funds in their hands and can do other investment business or a series of things, as long as the return on income is higher than the mortgage.
On the other hand, in the past 20 years, China's inflation has been enormous, even though the domestic economy has always been like this. It is gradually slowing down, but inflation still exists, and it becomes more worthless with the passage of time, so it seems that a loan now may only be 1/3 of the loan after 30 years.
I also applied for a decoration loan:
On 20/0/9, the house was handed over in the second half of the year, and the real estate license was issued in 2020. Just after the Spring Festival in 20021year, I wanted to decorate the house, but I didn't have any money in my pocket. Let me decorate the house.
So I applied for a decoration loan. As for how to apply for a decoration loan, I actually prepared it six months in advance, so the decoration loan went smoothly. The appraised price of my house was 202 1 and reached 2 million, so the renovation loan approved by the bank reached 360,000, and I lent it all out, with an annualized interest rate of only 3.8%.
In fact, I only spent 1.6 million on house decoration, and the remaining 200,000 can relieve my monthly repayment pressure, on the other hand, I can use the remaining funds to make my own financial investment.
Some people think that the loan interest is so high that they will repay in advance once they have funds:
No matter the average capital or the equal principal and interest, the repayment interest will always be several times higher than the repayment principal, and most of the repayments in previous years were only interest.
I'll choose the equal principal and interest. The monthly repayment fund is about 4,500 yuan, all of which are repayment interests, so the principal only accounts for 1 1,000 yuan.
Relatively speaking, the principal of average capital is relatively high, but the monthly income of those who choose average capital is basically not low.
As for the total interest of my loan165438+100,000,000 yuan and the repayment method of principal and interest, the total interest repaid in the previous10 year has already accounted for 50% of the total interest, that is, 495,000 yuan.
For this matter, I also specially consulted the account manager of the bank. He said that if the loan term exceeds 1/3, don't choose to repay in advance. After all, once the limit of 1/3 is reached, the interest has been paid back by half, which means that the principal will be lower and the interest will be more in the future.
Once the loan is 30 years, more than 10 years, don't think about prepayment, it's not cost-effective for yourself. After all, there are still a lot of principal and interest to repay.
If you really want to prepay, you can prepay within six years, so that you can reach a relatively balanced point, and the repayment interest must be included, but the repayment interest in 10 is much less.
Think about the problem from another angle:
Whether 10 or 15 years in advance, one-time repayment is cost-effective. After all, after 15, even if the interest paid is decreasing, we still pay the interest, so we don't have to pay the interest in advance, and our life pressure will not feel like a thorn in the back because of the mortgage.
There are ideological people, but whether that person can save money by prepayment does not mean that he thinks it is cost-effective.
My personal view on mortgage interest rate is still within the acceptable range, because many friends around me who buy houses are hovering around the annualized rate of 4.9%. Some people just bought it at that time, and the mortgage interest rate went up. Some people bought it at a discount of 20 15 to 20 17, and the lowest business loan for friends reached 4.65438.
Friends who have provident fund loans have never thought about prepayment, and the interest rate is only 3.25%. Where can I find this interest rate? Borrowing so much money for so long.
It is better to put the remaining funds in the bank for regular financial management, and the annualized rate can reach 4.25% or even 4.8%. This situation has won the interest rate of provident fund loans.
Summary:
If you don't know what you want to do with a sum of money, and you are considering prepayment, and it is not cost-effective, you will choose prepayment. After all, if the money in your hand has nothing to do with you, he will not generate income. Choosing prepayment is a correct choice, at least there will be no worries.
If the funds on hand can have higher returns, then it is inevitable to choose higher returns instead of repaying the mortgage in advance. More importantly, once the mortgage exceeds 1/3, it is relatively uneconomical.