If you are paying a mortgage or you are going to apply for one, this article interests you. And it is that today, we are going to analyze what compensates more, to amortize a quota or mortgage term. In addition, we are going to analyze it from several points of view, from the economic point of view and from a period of time, such as the monthly terms.
Amortize mortgage installment or term: which is more profitable?
Money is a limited resource that you have to know how to manage to get the most out of it. However, it is more difficult for some people, especially for all those who have to face a mortgage every month. And as you well know, banks do not forgive anyone, and we must face this payment if we do not want to lose our property.
The bad thing is that unless we have a good job or economic situation, facing a monthly amount equivalent or similar to the payment of a rental reduces our economic possibilities. For this reason, if you have money saved and you want to face the mortgage, you should ask yourself if it pays you more to face the payment of a few months or directly pay part of the fee you pay each month.
Profitability And Efficiency
Think that your situation is not the same as that of the rest of the people and depending on factors such as the total payment of your mortgage, the time you have left to pay it off, your financial situation and the terms to pay the final result will be different.
Therefore, you must discover which option is the most suitable. As a general rule, facing the term of a mortgage is more economically convenient than lowering the installment. The reason is simple, and you save more interest since by reducing the repayment time the loan can be repaid in a shorter-term and thus avoid paying less interest, so the savings are higher. This means that you have to choose well when and how we do the partial amortization of the mortgage since most of these bank loans tend to pay more interest in the first period or half of the term.
In other words, if we want to pay off the mortgage and it has a French settlement system, it pays us more to pay it off during the first years of it.
On the other hand, if you have another form of settlement, it will not matter that we take more time since it will compensate us for doing it later as we are not so affected by the payment of interest.
Total Or Partial Amortization Of The Mortgage
Apart from the payment of interest, we must ask ourselves if we are interested in amortizing in full, lucky those, or if it compensates us to do it partially. We tell you this because if you want to fully pay off your mortgage you have other good news, you can still access a tax break.
Of course, it is not for everyone. If you just applied for the mortgage a couple of years ago, you cannot take advantage of this tax reduction. This means that in the best of cases you can deduct up to 15 for what is paid per year for the loan with the sum of the capital advances and the payment of the installments.