With periodic prepayments, you can save a great deal of money on repaying your mortgage debt! The importance of housing savings savings is increasing, because with the help of state subsidies we can cancel them even more rapidly.
We will look at how LTP involvement is worth the repayment of our home loan
If you finish your loan early with LTP, you can save millions by reducing the longer maturity with early repayment.
If you deal with this issue, you might be right to ask why someone who can put down LTP monthly will not take it, because with a shorter maturity the debt will be quicker and the installment will be better!
It is a legitimate question to consider whether it is worth paying for LTP along with the repayment, that it may be shorter and less repayable! The repayment will have to be reduced in this case so the maturity will increase.
How the best?
We calculated a 7 million HUF, 20-year fixed-rate consumer-friendly loan, with a THM of 6.3% and a transaction interest of 5.99%, where LTP does not require a prepayment fee.
There are two options:
- The claiming family here chooses the shortest maturity, hoping that the amount repayable to the bank will be as low as possible. During the 11-year term, the monthly repayment installment is HUF 72,534. Because of this, our debtor cannot take any other savings, because with this monthly payment their monthly budget opportunity significantly decreases. In the course of 11 years, they pay interest of HUF 2,574,500, which in the end will be HUF 9,574,500 from the 7 million loan.
- In the second case, the same family extends the term to 20 years, then they will have a monthly installment of $ 50,101, and from the remaining $ 20,000 they will launch a monthly LTP for 52 months, making them $ 1,302,770 save. The capital debt will decrease to HUF 6.1 million during these 52 months. After the LTP prepayment, our loan will shrink to HUF 4.8 million, and the repayment will be reduced to HUF 39,412. They can save another $ 10,000 on a flat, or even take on $ 20,000. After the next prepayment, after 52 months, you can spend up to $ 1,954,160 (1,302,770 + 651,390) and the principal is only $ 3.8 million at that time.
Summarizing the LTP variation, our debtors are due at the beginning of the term, but the capital debt dropped to HUF 1.9 million, the monthly repayment installment decreased to HUF 19,583!
For the next period, it will be enough to start 1 x 20,000 HUF home savings. Over the next 52 months (totaling 13 years) and the capital debt of 1.34 million has been reduced, the last home savings will be fully paid off. The remainder of the $ 38,000 debt and the $ 600 down payment can now be paid out of pocket.
In summary, the loan was settled in 13 years instead of the original 20 years, with only 2 years delay compared to the first case. in turn:
How much was paid?
During the 13 years:
- during the first 52 months, they paid HUF 2.6 million (52 * 50.1 thousand) from repayers and the first prepayment of HUF 1.3 million,
- 2 million forints in the second 52 months (52 * 39.4 thousand) and 1.95 million forints in the second prepayment,
- HUF 1 million (52 * 19.5 thousand) for the third 52 months and HUF 1.3 million for the third prepayment,
- and the remaining 38,000 forints were paid out of pocket.
According to our calculations, the bank was paid a total of HUF 10.27 million over 13 years.
This is slightly more than in the first variation, where you have to repay $ 9.57 million in 11 years. However, the debtors paid only the greater part of the 4 LTPs, 3.5 million, because more than 1 million HUF was paid by the State as subsidy. If we deduct them with the low interest rates, it can be seen that they paid less than the other variation for 2 years longer. The family’s budget is strained in the first case, favorably relaxed in the second in 11 years, optimal for the family!
Both roads can be walked, but longer races can be more favorable!
It is also important to describe that you need to follow a stretched family budget over a shorter maturity, but wisely use the longer maturity to leverage your state-sponsored LTP to have a more favorable, predictable budget for your loan repayment period!
Home loan is a big financial decision in everyone’s life! All information on new family home improvement discounts and qualified home loans is available in one place upon request. We answer individual cases, explore the most important practical issues, and help adjust to the new CSOK. We will also help you to make Home Savings Cash!