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The opinions of the employees of s You are personal.
This time of the pandemic has brought great uncertainty and everyone has more or less influenced the market. The consequences were devastating for some companies and extremely benevolent for others.
For example, those in the restaurant guild have seen their income disappear between their fingers, while those in the disinfectant industry have done nothing but watch their sales grow.
One of the most contradictory twists was that of the real estate industry, as the COVID-19 further separated the divisions among buyers in this area.
It’s true that many of their jobs were fired, so the banks responded with what they could, promotions, and lowered their interest rates, but of course they tightened their requirements to the point that many are excited about the interest rates, however only they touch the few who can do everything they ask them to do. The construction companies in turn have done the same and offer special offers, discounts and payment options.
As a result, it goes without saying that those who have a stable job, who can develop from home, and who have one or two pesos in the bank, want to be encouraged to process a mortgage loan because they know when these conditions will repeat, and it is said that investing in bricks, although not the most profitable on the planet, is one of the safest.
If you are a person who falls into this category (stable job, money saved on a down payment, good credit rating) it is a good time to buy, even if you may have already done what almost everyone does not know what will their property cost in the end as soon as you have paid in full in fifteen or twenty years. When people get their repayment schedule, they almost always only look at monthly payments, but not that their $ 2 million division will cost them millions more because of interest and other additional costs. Well, banks are not little sisters of charity and it is normal for them to charge you for these interests.
But how can someone take an opportunity today and not pay that much money for interest? The answer is very simple: prepayments or extraordinary payments without the bank punishing you.
Banks don’t usually penalize major payments, but buyers should make sure of this before signing the contract. If you already know clearly and in writing that your bank will not penalize your extraordinary payment, start reducing these debts as soon as possible so that the department costs a lot less than you agreed to in the contract.
You may be asking yourself: If I know that I will have enough money to pay for the apartment in five or seven years, why not take out the loan in just these years? For liquidity. Well, you may not have that much money for the monthly payment, but you do have that money annually and collect all the bonuses, bonuses, and profits that your company offers, as well as the additional income that you have from other sources.
How can someone repay their mortgage in less than 10 years?
There are different methods. At Bancompara, we know that this is possible when people apply, commit, and especially when they have a plan.
To do this, first protect what matters and make sure that your mortgage does not cost more than 30% of your monthly income. You can calculate this income together with your partner. This way you ensure that you can cover the rest of your expenses and any other unforeseen expenses that may arise when paying your monthly payments.
Save in large chunks. Photo: Depositphotos.com
If you find that your mortgage is already drowning you on a monthly basis, you may not be able to pay it in a shorter amount of time as you are slowly sinking into bank credit and credit card payments that you cannot save on. You will wonder why. This is because when you are short of cash, you cannot avoid the unforeseen and unplanned expenses typical of normal life. From damage to your house and vehicle to simple expenses like clothing or accessories, everything can bleed to death if your mortgage payments are too high and you need to resort to credit to cover the rest of your life. Definitely try to have an emergency fund.
If your mortgage costs more than 30% of your income, you can try refinancing it. This is an ideal time as all banks have lowered their refinancing rates and are less likely to put obstacles on applicants.
If you have already managed to lower the monthly cost of your mortgage, it is time for you to create the plan. For example, if you still have 2 million pesos to pay and you want to pay them in 10 years rather than 20 years, it means you have to pay 200,000 pesos plus interest annually.
Let us assume that your monthly payment is 20,000 pesos per month, which you can pay comfortably, and that you, as the responsible person, can save 20% of your salary. Well … let’s be more realistic and suggest that you save 10%. If your partner’s salary with your partner is 66,000 pesos, this means that you must take the necessary precautions to save them 6,600 pesos per month, which do not result in savings as such, but make an additional payment for your mortgage. That means you could pay 26,600 pesos a month on your mortgage, which would shorten your payment time in a few years.
But it would still not be enough to pay for it in 10 years and not in 20 years. You would have to add your bonuses, bonuses, profit sharing and tax refunds to the additional payment. This method is possible, but let’s say it is the most difficult and requires too much discipline to safely earn an income for your sanity, because life is not just about paying a mortgage, it’s about enjoying yourself no worries about money, travel and other leisure activities
So if you think you can have this iron discipline, welcome you. If not, let’s talk about some other methods.
Use the credit and save in large chunks
Credits are not always bad. Many say: If you shouldn’t, you don’t, and yes, it can come true in this age. Where prices go up but wages don’t. There are three modalities for paying a mortgage in Mexico. In the first case, the monthly payments are fixed throughout the term of the loan. In the second case, monthly payments will decrease over the years. In the third case, only interest is paid at the beginning and capital at the end. The first model is almost always used in Mexico. In any case, you will receive an amortization table from the bank, in which all your payments are clear to you.
When you pay a debt in advance or in advance, the following things can happen:
The amount of debt decreases, although the term is maintained;
The term of the loan is shortened, although the amount of the monthly installments remains constant;
Both the amount of monthly payments and the term of the loan are reduced.
If you know how credit works, your money can really go where you want it, e.g. B. interest or capital. If a home loan is under the first system, with most of the interest paid initially, extraordinary payments should preferably be made at the beginning of the loan to avoid overpayment.
To do this, you can try a saving method that does not cut small and insignificant expenses, but larger expenses to allocate this money to the additional payment of the mortgage balance.
Many people think that they don’t have to cut more anywhere else, but of course you can almost always do without some things without affecting the average quality of life.
Here are some tips to save on “big chunks”:
Plan your vacation for half the planned price, the other half for the additional mortgage payment.
Evaluate the need for two or more vehicles compared to using public transportation or private transportation services like Uber. Keep in mind that the cost of a vehicle is not just that of monthly payment and gas. They also require maintenance, repairs, tax payments, and inspections.
Assess the ability to rent one of the rooms in your home to a student or family member who needs it. If you have an extra bedroom, it is often worth making room to pay your mortgage earlier.
If you want to treat yourself and buy a luxury item, try negotiating with yourself and not buying it or buying one of lower value.
Evaluate which valuables you could do without. Often we have things that we haven’t used in years and that can add up to a mortgage worth a month or two.
The method of saving in “big chunks” or “big wins”, as its creator Ramit Sethi calls it, is a method that works for many because they don’t have the pressure to cut small things that aren’t actually much economical Add value, but their absence makes our lives bitter.
Whatever you do, make sure that the money you save on the mortgage goes straight into the mortgage payment and does not become pocket money.
Are you ready to create your payment schedule? Pay this mortgage in less than 10 years and enjoy it for the rest of your life. We at Bancompara wish you the best of luck in building your wealth.