Borrowers often ask the question: what is better: annuity or differentiated mortgage payments. The answer will be simple: the second payment method is much more profitable. Therefore, banks are reluctant to provide clients with the opportunity to repay the debt in a differentiated manner.
Let’s pose the question differently: is it possible to take out a mortgage with differentiated payments in Russia? Yes, there is such a possibility. Of the large banks, Rosselkhozbank and Gazprombank are ready to provide it. In Sberbank, Alfa, VTB and a number of other institutions, mortgages can only be repaid in equal payments.
The difference between differentiated payments and annuity payments
Everything is simple here. The bank adds the amount of debt with the amount of interest for the entire loan period, then divides it by the number of months. This is an annuity payment method. If the debt is first divided by the total term and then interest is added, we get a differentiated payment method.
Conventionally, we can call the first method payment in equal parts, the second - payment in unequal parts. Advantages of the annuity method:
- the monthly payment is not too large;
- the debtor constantly pays the same amount - there is no need to find out a new figure each time;
- Banks are more willing to issue a loan because it is profitable for them.
The disadvantage of level payments is that the interest is paid off first, followed by the principal. Thus, the lender earns more from the borrower.
Is it possible to change the annuity payment to a differentiated one?
Once a mortgage agreement has been concluded, the loan repayment scheme cannot be changed. Banks give mortgages under certain conditions, and annuity is more profitable for them. But if the client wants to save money and has additional funds, then it is possible to repay the mortgage debt ahead of schedule.
There is no need to pay an early repayment fee.
To do this, you must notify the bank orally or in writing (early repayment requirements are specified in the mortgage agreement) of your intentions. Indicate the amount to be deposited and the date of the transaction. After the money is credited to the account, the amount of principal and interest will be recalculated, and the client will be given a new payment schedule. The operation can be carried out an unlimited number of times, the amount of contributions does not matter.
Be sure to notify about partial or full repayment ahead of schedule to avoid confusion and banking errors.
Which banks provide mortgages with differentiated payments and under what conditions?
Mortgage loans are the preserve of large financial institutions. Of the top ten large Russian banks, Gazprombank and Rosselkhozbank practice a differentiated approach. They offer the borrower 2 schemes: annuity and differentiated payment - to choose from.
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But this does not mean that the borrower can freely choose a more interesting scheme for himself. His income level matters. After all, when paying in unequal installments, the largest payments occur in the first years of the loan. The bank may not approve the loan if it deems the income insufficient.
For reference. Gazprombank will offer the borrower a wide range of loan products. Here you can take out a mortgage for housing on the primary and secondary markets, purchase square meters from the bank’s partners on favorable terms. The starting rate is from 9.5%. Good indicator for a mortgage.
At Rosselkhozbank, rates start at 10%. The calculator allows you to immediately make calculations taking into account a differentiated repayment scheme. You can buy an apartment, apartments, a house with land. The bank participates in government support for young borrowers, military personnel, families with children, etc.
Thus, before deciding which bank a mortgage with differentiated payments will be most profitable for you, evaluate your chances. Calculate both repayment options using the online mortgage calculator and choose the most suitable one.
Is it worth taking out a mortgage loan?
The housing problem is one of the pressing problems of Russian society. The majority of the economically active population, receiving an average salary of 20-25 thousand rubles, cannot save up for their own living space. Only entrepreneurs, top managers and highly paid officials buy real estate. Some people get the coveted meters from relatives. Someone has the right to rent an apartment owned by the municipality. Some citizens become homeowners as a result of fraudulent transactions.
Some analysts believe that the high cost of real estate in the Russian Federation is due to corruption in the construction industry. Some associate the inflated price per square meter with the need to purchase expensive foreign building materials.
Many couples are forced to rent rooms and constantly change their place of residence. Owners of premises often indicate in advertisements that they do not require guests with children and animals. Having small children makes finding housing very difficult. For many Russians with children, a loan is the only way to solve their housing problem.
A large loan imposes serious restrictions on the home budget. Loan installments amount to 30-40% of family income. For comfortable debt repayment, it is better to find additional sources of profit and reduce household expenses. You should also reduce your debt load.
Why is it more profitable to take out a mortgage with differentiated payments: an example
Let's say you borrowed 1 million rubles from a bank for 10 years at 10% per annum. And we chose the annuity system. The lender will immediately calculate interest for the use of borrowed money for the entire loan period - 585,800 rubles.
This money will be added to the principal debt - you already owe the bank not 1 million, but 1.6 million rubles. Then the amount will be divided into 120 months (10 years). We receive a monthly payment of 13.2 thousand rubles. The total overpayment for 10 years is 586 thousand rubles.
Attention! If you look at the graph, in the first month 8 thousand out of 13 will be interest payments and only 5 thousand rubles will be used to pay off the principal debt. Over time, the ratio will change (interest decreases, write-off of the principal debt increases). But the monthly payment amount will not change for ten years. As a result, the borrower will pay more in interest than with a differentiated system.
But another calculation is possible. 1 million rubles will first be divided into 120 months (the result will be 8,333 rubles). And then they will calculate interest on the remaining debt (also 8,333 rubles). Total – 16,667 rubles. But next month the debt will decrease, interest will drop to 8,263 rubles, and the monthly payment will drop to 16,597 rubles.
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With each new period, the payment will decrease. After five years it will drop to 12,500 rubles and continue to decline. For the last year, the debtor will have to pay about 8.5 thousand rubles. Thus, the total overpayment for 10 years will be 504 thousand rubles. This is 82,000 rubles. less than when repaying in equal installments.
Important! From the above example it is clear that the total overpayment to the bank with a differentiated approach will be lower. But the credit load in the first years of the mortgage is greater. Therefore, when choosing a repayment scheme, you need to take into account the borrower’s income. If your salary allows, it is better to choose a differentiated system. If your income is insufficient, opt for an annuity.
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Difference between differentiated and annuity payments
When applying for a mortgage loan, many people find it difficult to understand the large number of specific terms. And the type of monthly payments is often overlooked. But this is a mistake, the unpleasant consequences of which are then felt by customers.
Important. Today banks offer two types of payments - annuity and differentiated.
The annuity system implies that the borrower pays the entire amount in equal installments every month. No recalculations are provided throughout the entire payment period. It follows from this that a person often pays the accrued interest first, and only then the principal amount of the loan.
The differential installment also allows the borrower to pay the principal in equal monthly installments. But interest is calculated on the remaining amount of the debt, recalculated every month. This is more profitable, but at first a person pays quite large amounts.
A differentiated mortgage for clients allows over time to reduce the financial burden on the payer. In case of early repayment, the interest will change in favor of the borrower. Therefore, this type of payment is more profitable for some bank clients.
Let's sum it up
The benefit of a loan is determined not only by the payment scale. Important:
- interest rate;
- the amount of the down payment;
- possibility of deferment in case of force majeure.
If you are a long-time client of Sberbank and are entitled to benefits, it may be more profitable for you to contact this institution. Although here they lend only using the annuity system.
And vice versa. If the mortgage is extended over a long period and the amount exceeds a million, the total overpayment under the annuity system can reach 200–300 thousand rubles. In this case, it is better to take out a mortgage with differentiated payments. We'll have to hurry! After all, there are very few loan offers with similar conditions left.
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Author:
Mortgage specialist Maria Yurievna Sokhan
Publication dateJuly 7, 2019March 31, 2020
Advantages and disadvantages
Differentiated payments have undoubted advantages:
- the payer saves by paying off the mortgage early;
- the monthly payment is calculated on clear terms;
- it is easy to save on the cost of insurance - the price of the policy decreases along with the remaining debt;
- gradually the amount of payments decreases.
The disadvantages include:
- high requirements of lenders to the financial position of the borrower;
- a significant increase in the credit burden during the first period after the start of payments;
- if creditworthiness deteriorates, the risk of incurring a large mortgage debt is very high;
- Difficulties with planning a family budget due to different amounts of monthly payments.
Important. When choosing a mortgage with graduated payments, borrowers carefully calculate the potential benefits and costs.
Annuity and differentiated payments: what are they, calculation methods, which are better
Annuity payments also provide benefits for borrowers, since in this case the debtor will always remember how much will need to be paid when the payment is due. The high financial burden during the loan period is also eliminated, since the debtor will always need to pay a strictly fixed amount, which is agreed upon with the bank when signing the loan agreement.
The annuity method is repayment of the loan in equal installments . The borrower pays the lender a fixed amount each month, which does not change over time. This makes sense, since this format of loan repayment is more convenient for those borrowers who are accustomed to seeing stability in everything.
Sberbank mortgage: annuity or differentiated payments
After the loan is closed, the client should take a statement of no debt. The insurance contract must also be cancelled. The removal of encumbrances from collateral real estate is carried out by Rosreestr (to carry out the operation, you must pay a state fee).
Many people do not pay the necessary attention to proper documentation. They provide an incomplete package of papers. Documents are submitted with corrections and erasures. A common problem is the provision of false and unreliable data. Security officers quickly identify false documentation and stop fraud together with the Ministry of Internal Affairs.
Annuity and differentiated mortgage repayment scheme: what to choose
This type involves systematic repayment of debt , in which loan body is paid in equal installments , and interest decreases monthly . As payments are made, the amount of the required monthly contribution will gradually decrease.
- in the annuity scheme the payment is fixed, in the differentiated scheme it changes every month;
- under the same lending conditions, different amounts of overpayment are obtained;
- with an annuity, in the first years, the contribution amount includes a smaller amount of the principal debt;
- all banks use the annuity scheme, while the differentiated one is used much less frequently.
Which is better: annuity payments or differentiated payments?
When I had a loan several years ago, my preference was given to differentiated monthly payments, since it was clear what amount would have to be paid monthly; in my opinion, this is much more convenient. True, the total amount according to the payment schedules turned out to be a little more, but still the loan was repaid ahead of schedule, but it was more comfortable for me.
If only everyone who took out a mortgage loan was interested in the terms of its repayment on time. that would be very good, otherwise we’ll take it first. hoping for “maybe”, and then after the fight we wave our fists. It turns out it would be possible to get it cheaper and get by with less money. But often you don't have to choose. Not all banks provide such a choice; you have to agree with what they give.
Sberbank mortgage: annuity or differentiated payments
If residential buildings were erected using bank loans, the buyer of the living space can receive a discount of 0.5% per annum. Borrowers working in the public sector are entitled to receive benefits. Persons belonging to socially vulnerable segments of the population can also become participants in special programs.
An individual schedule is usually prepared for organizations whose business is seasonal. An individual loan repayment scheme can combine differentiated and annuity payments, as well as periods of “mortgage holidays”.
Calculator to calculate benefits
It is almost impossible to refinance a mortgage loan, take a vacation, or ask for restructuring. Therefore, it is necessary to calculate the overpayment on the loan before submitting the application. Using a mortgage calculator, interest rates can be calculated within a minute. You need to fill in the empty columns with the loan parameters and immediately get the result. A preliminary calculation using a mortgage calculator will help you navigate the benefits of each method of debt repayment and calculate comfortable terms.
Our calculator and tips on how to calculate benefits
| Mortgage program | Amount of borrowed funds | Interest rate, % per year | Return period | Share of the down payment, % of the price of the purchased housing | |||||
| Gazprombank | Primary market | From 500 thousand rubles | From 9.2 | Up to 30 years old | Mortgage housing lending | From 100 thousand to 60 million rubles | From 8.85 to 12 | 1 – 30 years | From 15 |
| Mortgage under two documents | From 100 thousand to 8 million rubles | From 9.35 | Up to 25 years |
| date | Type | Amount/rate | |
| Term | 0 months |
| Sum | 0 rub. |
| Bid | 0 % |
| Overpayment | 0 rub. |
| Start of payments | |
| End of payments | |
| Required Income |
| № | date | Payment | Main debt | Interest | Balance owed | Early repayments |
If you have any questions, you can consult for free via chat with a lawyer at the bottom of the screen or call by phone (consultation is free), we work around the clock.
Our mortgage calculator is a simple and visual financial tool with which any user can make calculations for any loan, receive structured information on overpayment, required income level and potential benefit for the borrower.
The functionality of the calculator consists of the following blocks required to fill out:
- loan amount (enter the exact amount of borrowed funds provided by the bank minus the amount of the down payment paid by the client);
- type of payments (annuity or differentiated);
- interest rate;
- maternity capital (you will need to indicate whether it was used in the process of repaying the mortgage loan);
- date of loan issuance;
- loan term (years and months).
Preliminary calculations on several attractive offers from leading Russian banks will allow you to determine which option will be more profitable. Following these simple tips will help mortgage borrowers obtain a mortgage with maximum benefit:
- If a client plans to take out a loan and pay the bank within 10 years, then the logical and most optimal payment system would be an annuity system, which will allow the loan burden to be distributed as risk-free as possible without damaging the family budget.
- If the bank approves an application with a debt repayment period for a long period (over 20 years), but the desire and search for ways to pay the creditor early, differentiated contributions will be an advantageous type, which will minimize accrued interest.
- Clients applying for a mortgage loan under a simplified scheme using two documents with a higher interest rate (especially with the prospect of early repayment) will also benefit from a differentiated calculation scheme.
- It is recommended to compare and calculate as many options and offers from banks as possible on the mortgage calculator.
A simple example of calculating the final overpayment for the same mortgage loan, but with different types of payments, is the following case. For example, a client receives a loan in the amount of 5 million rubles with a repayment period of 25 years at 10% per annum. With annuity payments, the final cost of the loan will be 8.6 million rubles, and with differentiated payments - 6.27 million rubles.
The difference is noticeable, especially when you consider the fact that in the case of the annuity system, the client initially pays only profit to the bank and practically does not repay the loan itself.
Sberbank mortgage
In some banks, this list is expanded by choosing one of two debt repayment schemes: annuity (equal payments) or differentiated (equal parts of the principal amount of the loan). Depending on it, a debt repayment schedule is constructed and the full cost of the loan is determined in accordance with current legislation. These conditions are fixed in the loan agreement. In both options, the periodic payment amount combines two components: part of the principal amount of debt and part of interest and commission charges.
When deciding on making payments on a Sberbank mortgage ahead of schedule, what an annuity payment is, the borrower realizes, being surprised at the slight decrease in the amount of the principal debt in his credit statement.
Specifics of mortgage lending
A home loan has a number of characteristic features that distinguish it from other financial instruments. Housing loans are large in volume and require the presence of co-borrowers and guarantors. Money is provided on the security of real estate for a long time (up to thirty years).
Security issued as collateral must meet the following standards:
- The building has no wooden floors;
- The house is not in disrepair or dilapidated condition;
- There are no strangers registered in the apartment;
- The house was built in a microdistrict with a favorable environmental situation;
- There are no encumbrances placed on the housing (seizure, rent, etc.);
- The rooms have electricity, heating, hot water and cold water;
- The age of the building does not exceed 30 years;
- The premises are in satisfactory sanitary and technical condition (no insects, mold, mildew, etc.);
- The apartment building is located in an area with developed infrastructure (there are schools, hospitals, shops and public transport stops within walking distance);
- Depreciation of the housing stock cannot be higher than 70%;
- The apartment is not located on the first or ground floor.
The windows of the apartment should not overlook a landfill, industrial enterprise or cemetery. An expert inspecting the premises talks with the residents of the house and the local police officer. Residential properties located in areas with high crime rates will not be accepted as collateral. The collateral is subject to mandatory insurance in accredited companies.
The counterparty does not have the right to perform any actions with the collateral without the consent of the lender. Recipients of borrowed funds can take advantage of various benefits that allow them to reduce the loan rate. A person has the right to apply for a tax deduction for the amount of personal income tax paid during the reporting period.
The bank's specialists have developed mortgage programs intended for different social categories. The most popular products are loans for the purchase of square meters in new buildings and on the secondary market. Mortgage loans with state support are intended for large families. There are also products for citizens planning to build a cottage or garage according to their own design.
If a person owns liquid real estate, he can take out a non-targeted loan and improve his living conditions. Money for the purchase of living space is transferred only upon payment of an amount equal to 10-30% of the market price of the collateral. The loan is provided in rubles or foreign currency.
Counterparties who find themselves in difficult life situations can take advantage of restructuring programs. If the applicant finds it difficult to choose a specific offer, he can contact a realtor. The specialist will tell you how to deposit funds that will be used to pay off your mortgage loan.
