Ten questions and answers about paying off your mortgage

Questionwho has a home loan at a floating rate will be exempt from paying fees for early repayment next year, reminds DECO Protestsrecommending that “if you have savings, Paying off home loans can be a good solution to reduce performance.

The consumer advocacy organization prepared a set of questions and answers that I came to to clear up some doubts about the amortization of debt in a home loan. Stay on top 10:

1. Are there minimum amounts for early repayment of the principal on a mortgage loan?

“Not. Depreciation can be partial, in the amount available or full. However, the larger the amount to be amortized, the lower the amount of interest payable, and therefore the smaller the monthly payment payable to the bank. Use the file we provided above to model the impact of capital depreciation on monthly payments.”

2. How much of the early depreciation fee is paid?

“Currently, the fee paid to the bank for early repayment is 0.5% for floating rate housing loans, that is, five euros for every 1,000 euros returned. For fixed rate home loans, this fee is 2%, i.e. 20 euros. euros for every 1000 euros of redemption.

However, in 2023, with the measures announced by the Government, floating rate housing loans will not pay prepayment fees. If you have some savings on the side and a variable rate mortgage, this may be the right time to pay off the bulk of your loan.”

3. Can I pay off the principal on my mortgage at any time?

“Yes, you can repay the borrowed capital whenever you want. You don’t have to, for example, wait for the anniversary of the title deed.”

4. Can the bank refuse early repayment?

“No, if there are no restrictions from a contractual point of view. Although this is rare, the contract may provide, for example, that early repayment is possible only after a few years after the start of the contract.

5. Is there a limit on the number of repayments I can make during the term of the loan?

“Not. You can repay the main debt as many times as you like, namely every month. However, it is preferable to save a good amount and make annual payments. If you make monthly payments, you will reduce your principal debt faster. However, if you do an annual depreciation, the reduction in the monthly payment will be more significant.”

6. Does the premium decrease next month after depreciation?

“If you are making a partial principal repayment, the period over which you will see the reduction reflected in your monthly payment is seven days. If the repayment is in full, the period is ten days. However, if your monthly payment has already been issued or calculated, you may have to wait until the next month to see a decrease in the amount due.”

7. I have paid off my entire mortgage loan. What should I do next?

“If you have already repaid the entire amount due on the loan, you must request a distraat, a free document confirming the repayment of the loan from the bank. Then, at the Land Registry Department, you must request a burden on the property, since when buying it with a bank loan, it is given as a guarantee.”

8. I have money invested in PPR. Can I use it to pay off my mortgage principal early?

“Not. PPR can be used, for example, to pay mortgage installments that are past due or due, but not to prepay the principal on a home loan.”

9. There are only four years left before I pay off my 30-year loan. Should I depreciate?

“You can always amortize it if you don’t have an alternative application for your savings that will allow you to make a big profit. However, if you only have four years left to repay the loan, you will no longer pay a very high amount in interest and, therefore, the cost of the loan should no longer be too high.

10. Does prepayment of borrowed capital affect the IRS?

“Not. Currently, interest on loans entered into before December 31, 2011 can be deducted from the IRS. Contracts entered into after this date do not have this tax benefit. However, because they represent a significant expense for families, DECO Proteste argues that, as in the past, interest on all home loan agreements can be deducted from the IRS.”

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