Mortgage payments algorithm
To use the mortgage, not necessarily to become dokoy in financial matters. But the understanding of how banks pay interest and form a repayment schedule can be very useful for the potential borrower.
Species of interest rates and how interest on loans in the world used at least a dozen. But Russian banks are usually two ways to calculate the customer - annuity (equal) and differentiated (reduced) payments. Its advantages and disadvantages have each of these methods. Identify the most suitable borrower must have on the stage of selecting a credit program.
Annuity payment - a monthly loan payment, which includes the amount of accrued interest on a loan and part of the principal debt. Annuity payments are used in almost all types of loans issued to individuals, since this type of calculation is convenient for the customer and profitable for the creditor organization. If the annuity payments to the bank receives a slightly higher interest income, and for the client, this kind of calculation is more convenient and easy to understand: every month the borrower pays the same amount of repayment of the loan and can, on this basis, calculate its budget until after the payments.
When Annuity payment is fixed in the contract a certain amount of payment on the loan, rather than the proportion of the size of the recovery of the debt. The amount of annuity payment - is a certain average amount that does not change depending on the loan repayment period (beginning or end of term). The structure of such payment at the beginning of the repayment period is mainly the interest on the loan and only a small part - the body of the loan (the amount that the client actually received). After some time, this proportion is flattened, and by the end of the repayment period is paid almost entirely principal.
Differentiated payments consist of split the whole period of repayment of the loan principal and variable (decreasing) part of the interest on it, which is taken from the balance. That is, when differentiated payments the credit is paid in equal installments over the life of repayment. Thus, the total amount of payment each month decreases and the principal repayment evenly distributed throughout the term of the loan.
Differentiated payments falls most heavily on the borrower in the early years of payments on a mortgage. But about the middle of the period of loan payments on mortgages are considerably reduced. The main thing to understand: under the same conditions of the loan (term, amount, interest rate) the total amount of annuity payments will be higher than the total payments for differentiated payments. When Annuity payment reduces the principal debt is uneven: in the first period of maturity most of the payment is interest, and the body of the loan does not decrease. Therefore, the total amount of payments compared with differentiated payments get higher. When choosing differentiated payments total family income should be about a quarter more than the annuity.
The early calculation
Perhaps the main difference between the annuity payments on a mortgage from differentiated feels client who has decided to repay its debt to the bank. For example, a borrower in good faith to pay the fees for a year or several years. The financial situation of its improved, and he decided to pay off the debt at a time. At this point, he discovers that paid mostly interest only for future years, as the body itself is almost the loan has not decreased.
If the annuity payments at the beginning of the body of a loan decreases slowly, and the total amount of interest accrued more. For the borrower's disadvantage is that if he decides to repay the loan ahead of schedule, interest paid in advance will be lost.
When differentiated payments have early repayment without significant financial loss, even in the first months after receiving the loan. Also provides for partial repayment of the loan (deposit any amount in respect of principal). In this case the size of the next payment will be determined based on the amount of debt at the moment.
Possibility of early repayment, he stresses, is usually specified in terms of the bank. In both cases - and with the annuity, and differentiated payment - conditions for early repayment are specified in the contract with the customer's consent. Early calculations on a loan with the annuity payments may be nearly as profitable as in the differentiated, if recalculation of interest payments was provided in advance.
Most often in partial early repayment of a loan customer chooses from the proposed Bank of options: either decrease the amount of monthly payments, or reduced term loan repayment.
Some advantage differentiated forms can also be seen in the payment of insurance fees on the loan. In this form of payment the borrower's debt is reduced faster, thereby minimizing the cost of insurance.
Credit to the maximum
Banks that focus on the issuance of long-term loans (up to 25 years), usually offer borrowers a form of payment as an annuity. Differentiated payments uses a limited number of banks, working with a mortgage, but the choice is here.
This situation is due to the fact that credit institutions more profitable to use the annuity scheme. Choosing an annuity is dictated not only care about the benefit of the bank, but loyalty to the client. The contract spelled out in annuity form of payment allows borrowers to include in the range of families with not very high income. In this calculation the bank may maximize the amount and term of the loan without substantial restrictions on the borrower's income. Then, as in the case of differentiated calculation of the initial mortgage payments could exceed the limit between the client's income and expenses for servicing the loan.
Thus, the choice of differentiated payments verified the borrower's income or co-borrowers must be about a quarter more than the annuity. For example, to obtain a loan of 1 million 200 thousand rubles. with annuity income of the borrower (the family) should be about 40 thousand rubles. per month, while differentiated payments - no less than 55 thousand rubles.
Proposed form of loan repayment should be an important consideration in selecting a mortgage program. Differentiated payment is acceptable for those who want to spend a minimum and has a high enough income. Borrower who wants to get the maximum amount of credit for not very high wages, more convenient and cheaper to use annuity payment. In any case, the person who chooses to take a mortgage loan, must be weighed to assess their financial capabilities in the long term and to select such credit conditions that will allow his family to effectively address the housing issue.
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