How I reduced my mortgage rate by 4%: personal experience

The article will tell you about effective ways to reduce your mortgage payments.

Due to the poor supply of Russians with their own square meters, many are forced to resort to housing lending services. A mortgage loan is a rather lengthy undertaking that requires financial stability for several decades to come. However, no one is immune from economic collapse. Dismissal from work, deterioration in health, and the birth of a child undermine the usual rhythm and financial situation of the family. In such situations, many are no longer able to repay the previous amounts on the loan and begin to wonder how to reduce mortgage payments.

What are the monthly mortgage payments made up of?

Payments are calculated based on several constant values, which include:

• Cost of purchased real estate. The higher the price, the more money will be required on credit.
• An initial fee. The contributed part of the cost allows you to make changes to the amount of loan funds.
• Loan terms. The maximum term for a mortgage is 30 years. The longer the period, the greater the remuneration the bank will require for the use of funds.
• The interest rate determines the amount of overpayment on the loan. The indicator is influenced by the category of the client, the terms of the transaction, life and health insurance, and the presence of guarantors or co-borrowers.

Thus, even at the stage of applying for a mortgage loan, you can regulate the monthly payments. For a more correct understanding, the site presents a standard loan calculator into which you can enter all the variables and get the result. By adjusting various indicators, you can choose the best option based on individual preferences.

Mortgage lending offers an annuity repayment system. Contributions are made in equal installments, the amount remains unchanged throughout the entire period of the contract. It includes the principal debt and bank remuneration.

Reduced payment at Sberbank

When applying for a reduction in payments at Sberbank in 2021, first of all, you need to visit the nearest branch, write a petition and provide papers proving the impossibility of making transfers in the same volume. The organization provides a restructuring service, which means a simultaneous extension of terms and a reduction in payments. The institution also offers refinancing, that is, issuing a new loan in order to liquidate existing ones.

Offered loan terms:

1. Duration limit of 30 years.
2. Loan volume – from 1 to 7 million (80% of unpaid funds).
3. Interest rates – 10.9 – 11.65%.
4. Risk security is real estate collateral.
5. The period for consideration of the application is up to 6 weekdays.
6. There are no penalties for early repayment.

Requirements for the borrower:

• at the time of cancellation, age from 21 to 75 years. That is, when a pensioner of 65 years old takes out a loan, funds will not be issued for more than 10 years;
• length of service at the last place of employment for at least six months;
• confirmation of family income;
• the total length of service over the last five years is more than 1 year;
• presence of Russian citizenship;
• the ability to secure collateral - an apartment, a dacha, a house, a plot of land, etc.

Is the loan term taken into account?

Most citizens, when applying for a mortgage loan, try to pay off their debt faster, so they choose the minimum repayment terms. This approach is not correct from a practical point of view. This gives a large monthly contribution, which requires not only financial stability, but also frugality.

The maximum possible term of a mortgage loan can significantly reduce the financial burden of the loan. However, overpayments on debt also increase. It is recommended to choose a time frame so that payments do not exceed 30% of income.

Sberbank does not provide penalties for early repayment. Therefore, it is better to take time with reserve when concluding a contract, so that unexpected financial shocks do not lead to delays, for which a penalty is provided. This makes it possible to independently regulate the size of the monthly contribution, as well as pay with a reserve in order to temporarily change the payment amount (if necessary).

Depositing large amounts will allow for recalculation, which will reduce the level of overpayment for the use of borrowed funds. Thus, the client himself decides in what parts to cover the debt and leaves some “safety cushion” in case of unforeseen life difficulties.

Reducing the mortgage term VS reducing the monthly payment

With partial early repayment, the question arises, what is more profitable, shortening the mortgage term with Sberbank or reducing the monthly payment? You can understand it with a specific example.

The borrower, on April 8, 2021, took out a mortgage for 1,500,000 rubles for 7 years, at 10.2%. If monthly payments in the amount of 25,919 rubles are made on time, according to the schedule, the overpayment will be 573,930 for the entire period of using borrowed funds.

The borrower has a deposit in the same bank in the amount of 800 thousand rubles, but its validity period ends on April 1, 2021. It turns out that in exactly one year he will contribute 800 thousand as partial early repayment.

Option 1. Reducing the term of the Sberbank mortgage.

If all the money is deposited, the final payment date will be postponed to 03/08/2021, i.e. will be reduced by 49 months. At the same time, the full overpayment will be 201,213 ₽. and will decrease by 372,717 ₽.

Option 2: How to reduce your monthly fee.

The borrower can also reduce the loan burden and reduce monthly payments. As a result, in 7 years he will replenish the bank’s capital by 317,037 rubles, the savings for the debtor will be 256,893 rubles.

Analyzing the examples given, reducing the loan term is much more profitable. But the second option also has its advantages: if you continue to pay according to the old payment schedule, making partial early repayment every month, the mortgage payment period will be reduced along with the overpayment.

Pros and cons of reducing mortgage payments at Sberbank

The main advantages of early repayment with a reduction in monthly amounts:

1. The borrower's financial situation improves.
2. There is an opportunity to use the saved funds for personal purposes.
3. The borrower can open a deposit and use the interest received to pay off the mortgage.
4. By reducing the loan burden, the client will increase his chances of receiving approval from another bank.

The only drawback : when making partial early repayment with a reduction in the mortgage term, the borrower will save a larger amount of money than by reducing monthly payments.

Self insurance

When drawing up an agreement, the employee offers to insure the purchased property and the life of the borrower in an accredited company. There are 2 or 3 systems to choose from, but there are many more available. The difference in tariffs reaches 30% of the contract value.

Based on the fact that the term of mortgage lending is usually quite long, by independently monitoring and choosing the optimal insurance rate, you can save a significant amount. The contract with the insurance company is concluded for the entire period of obligations to the bank. In some cases, simply studying the offers will save you up to 100 thousand rubles.

In what cases is it necessary to go to court?

Quite often in judicial practice it is necessary to consider cases related to a bank’s violation of regulatory documents. Control over compliance with contractual obligations and changes in the refinancing rate is a good opportunity to reduce the amount of payments.

The regulations of the Central Bank (No. 39 of June 26, 1998) set out the procedure for calculating interest. Violation of such a regulatory act may cause a change in loan obligations. For example, a bank can be held liable if interest on the balance of the principal debt was accrued at the wrong time.

Also, if the contract contains a direct relationship between the cost of the loan and the refinancing rate, the lender can himself verify the correctness of the accruals, and if discrepancies are detected, seek help from the judicial authorities.

Use of restructuring

Life situations are different; no one is insured against temporary or complete loss of ability to work due to injury. In order not to lose the purchased apartment, you need to get a deferment or reduce your loan payments as much as possible.

Restructuring is based on increasing the loan repayment period, which provides a significant relief in the amount of payments. The amount of overpayment also increases. To receive the service, you will need to provide the bank with the following documents:

• Statement of the established form.
• Passport of a citizen of the Russian Federation with a registration mark.
• Certificates of income level.
• Document serving as the basis for recalculation. Medical certificate of temporary incapacity for work, disability.
• Mortgage loan agreement.

The application is reviewed within 5 working days. After approval, the client is offered new terms and a restructuring agreement is signed. The recalculation made is reflected in the new loan repayment schedule, which is issued to the client at the bank branch.

The extension of the term is limited by the age of the borrower. At the end of the contractual obligations, it should not exceed 70 years. Each case is considered individually.

Conditions for early repayment under a mortgage agreement

Each borrower, having received a loan from Sberbank, has the right to arrange partial or full early repayment, if this does not contradict the terms of the loan.

It is important to clarify in advance the type of payments that the borrower makes each month. This is necessary in order to decide on a profitable option for early repayment.

When making an annuity payment

When applying for partial early repayment for a loan with annuity payments, the borrower can independently decide whether to reduce the monthly mortgage payment or shorten its payment period.

Partial early repayment of the loan is carried out:

• on the Sberbank Online website;
• at the regional office.

In the first case, there are restrictions:

• it is impossible to shorten the payment period online; to do this, you will need to contact the bank office with an official application;
• The minimum amount for NDP is not less than 99% of the amount of the next monthly payment.

In case of partial early repayment, additional payments are not required.

With differentiated payment

Partially early payment of the mortgage is credited to the loan account, repaying the debt of future periods, canceling the borrower's obligation to pay it at that time. The client will be able to temporarily reduce the mortgage payment, easing the financial burden.

For example

The loan payment is 20,000 + accrued interest on the remaining debt. This month, the borrower contributed 100,000 rubles, completing a partial early repayment. Therefore, over the next 4 months he only needs to pay interest on the loan. On the fifth month, the borrower will again have to pay 20,000 + interest for the period.

Monitoring changes in banking offers

Economic development is pushing financial organizations to develop more profitable lending programs. Therefore, the interest rate on mortgages may differ depending on the year the contract was concluded. Recently, there has been a trend towards a decrease in remuneration for the use of borrowed funds. Sberbank also tries to offer clients the most comfortable conditions.

You can contact a bank employee to review the terms of the agreement. Most often, the company meets its clients halfway and is ready to reissue the loan to a more profitable program. Therefore, it is important to monitor all changes in the terms of mortgage lending and promotions.

To obtain approval to change the conditions, you must be a conscientious performer of your obligations. The bank will not consider the application of a client who is in arrears in repaying the loan. The obligation must be fulfilled exactly, then employee loyalty will be maximum.

If the mortgage has not yet been taken out

To get a mortgage with the lowest possible payment, you need to understand what it is made up of. The monthly payment includes:

• cost of the apartment;
• down payment;
• interest charges.

The mortgage payment period will also affect the payment.

How can I reduce my monthly payment? The most important indicators are the amount that goes into the loan and the repayment period. By changing this data in the mortgage calculator, you can create the payment required for the borrower.

Take out a loan for the maximum period

If you take out a mortgage for a short period, the overpayment will be less. But if the borrower is interested in a minimum payment, then it would be better for him to take out a housing loan for a long period - the monthly payment can be reduced by extending the loan for the maximum period.

The lower the monthly payment, the lighter the client’s financial burden. In case of a difficult financial situation, it is recommended to have on deposit the amount of savings for 3 – 6 monthly payments.

Reducing the monthly installment is a practical solution, as the borrower minimizes the risk of non-payment.

Attention! It is recommended to choose a monthly payment amount no more than 40% of average income. This way, the borrower will be comfortable paying off the mortgage and maintaining the same standard of living.

Choose annuity payments rather than differentiated ones

The annuity schedule assumes that the borrower makes equal contributions throughout the entire period. Moreover, in the first years of the mortgage, most of the payment is accrued interest, and by the end of the term, most of the payment goes to repay the debt itself.

The differentiated payment system differs in that the part that goes towards repaying the mortgage body is fixed. And on top of the fixed part interest is charged. Thus, it turns out that in the first years the contributions are significantly higher than in subsequent years.

Although the differentiated schedule is more profitable than the annuity schedule, the second one is much more comfortable for the borrower. If the applicant’s priority is to reduce the size of the monthly payment, then the annuity schedule should be chosen.

If you plan to take out a mortgage at Sberbank, then the lender will use an annuity repayment system.

Maternity capital as debt repayment

Improving the demographic situation is a priority in domestic policy. According to the law, upon the birth of a second child, the family is allocated funds - maternity capital. Its size is large enough that it will significantly reduce mortgage payments.

After receiving the certificate, it is enough to contact the bank and write an application. The amount is credited towards the repayment of the principal debt, which will reduce the total overpayment on the loan after recalculation. The birth of a child will make it possible to save up to 3-4 thousand rubles every month on paying off a mortgage loan (it all depends on the size of the debt).

How to reduce your monthly mortgage payment at SberBank?

Sberbank has all the classic programs that allow you to reduce the monthly mortgage payment. The company actively participates in government programs, allows maternity capital to be used to cover obligations, and is ready to carry out refinancing or restructuring. The list of actions and conditions for the procedure directly depend on the service. A family in which children have just been born may be granted a mortgage holiday. During this period, the borrower will only be required to repay accrued interest without closing the principal.

Attention

If you want to change your monthly mortgage payment, contact SberBank and get a preliminary consultation.

Tax deduction

Every citizen who purchases housing with a mortgage is entitled to a tax deduction. It is 13% of the cost. The only negative is that the maximum amount is 2 million rubles.

Thus, if the loan exceeds 2 million, then the net savings is 260 thousand rubles. These funds can be used to repay the principal debt, as well as maternity capital. Due to this, mortgage payments can be reduced by 2-3 thousand on average, depending on the size of the loan.

Reduction methods

• It is more profitable for the client to establish a differentiated loan liquidation scheme. Since in this case the volume of payments decreases every month, which does not happen with a fixed scheme. Also, the overpayment on interest will be several times less;
• When applying for a loan, employees immediately offer a choice of insurer. However, here it is better to think and decide everything yourself. As a rule, an offer is made to take out insurance from one, maximum two companies, but the organization cooperates with at least 10. You should ask the institution to provide the necessary information, study the insurance conditions of each company and make a choice on the more acceptable one. Thus, prices between companies sometimes differ by 40%;
• You should take out a loan with a large margin of time to repay it, that is, for a longer period of time. If possible, you can liquidate the loan earlier by paying increased amounts. And the mandatory contribution will be less for a long period. There is no need to apply for a loan based on maximum amounts;
• monthly payment planning. It should also be taken with a reserve. For example, are you ready to shell out 80 thousand a month for 15 years. In such a situation, it is better to sign up for 30 years and pay half as much or as much as planned, in order to quickly cancel the debt. So, you don’t have to paint yourself into a corner;
• setting aside funds in the account will allow you to get rid of unnecessary expenses and accumulate funds that will subsequently be used to repay the loan;
• constant monitoring of banking offers. It’s worth checking out the bank’s offers on the lender’s website. If an institution offers mortgage lending on more favorable terms, then it is allowed to contact the organization with a request to change the agreement, citing its proven reputation as a decent payer as justification;
• registration of tax deduction upon acquisition of housing. The maximum payment is 260 thousand rubles (clause 3, clause 1, article 220 of the Tax Code of the Russian Federation);
• receiving interest compensation. The maximum possible amount is 390 thousand (clause 4, clause 1, article 220 of the Tax Code of the Russian Federation);
• the use of maternity capital to improve housing conditions is provided for in Article 7 of Federal Law No. 256. This measure will reduce expenses for each month;
• If the purchased home is not the main and only one for the family to live in, then it is better to rent out the living space while the loan is being repaid. This will ensure the flow of funds to the family and a constant flow of payments to the bank.

Mortgage payment reductions are not a myth. You should think about your financial capabilities and stability in advance, even before going to the bank to ask for a loan.

Saving funds on deposit

Funds to repay the mortgage are debited from the client’s personal deposit, where he deposits money. Having additional opportunities will allow you to save large amounts. Early repayment of a loan is a lengthy procedure, so you should not pay in small installments.

The best option is to put aside finances on deposit. By transferring more funds to a bank account than required, you can accumulate a significant amount in a short period. Money in a bank account is more difficult to spend than money in your immediate vicinity.

Having accumulated a significant amount of funds, you can contact the bank with an application for early repayment and a request for recalculation of payments. Provided you choose a longer period and the optimal amount of planned contributions, accumulation will not cause difficulties. Thus, you can reduce the financial burden of a mortgage loan in a fairly short period of time.

Borrower's rights under the law

According to Law No. 284-FZ of October 19, 2011, the bank does not have the right to refuse a borrower early repayment of a mortgage. Upon official application, each client is allowed to close a mortgage loan with Sberbank earlier, without the consent of the lender. However, it is important to notify the institution of your desire in advance - no less than 30 days before the date of planned debt repayment. The specified period is specified in the mortgage agreement.

Important!

Some bank contracts specify a minimum amount for early repayment. In Sberbank it is 15 thousand rubles.

Some commercial banks provide a commission for early repayment in the amount of 3-5% of the payment made. But penalties do not apply to mortgages - according to the law, the lender does not have the right to fine the borrower for wanting to repay the loan before the end of the contractual relationship.

Renting out purchased property

If the purchased apartment is not the only place of residence for the family, then renting out is an excellent option to reduce the load. The proceeds can completely cover the scheduled payment. Adding your own funds will allow you to pay off your debt to the bank ahead of schedule.

This aspect is specified in the contract and is strictly prohibited. This is due to the possibility of property damage. The purchased object automatically becomes collateral, so the bank needs guarantees of safety in the form of insurance and non-use for commercial purposes. However, if the funds arrive in the bank account on time, there are no overdue payments or debts, then most likely the employees will not check the apartment.

If the debt is paid off only from rental proceeds, then the property will pay for itself. The only negative is the long period. This activity relates to long-term investing. The real estate market is stable, which is why it attracts many.

The nuances of early repayment on a military mortgage

Partial early repayment is also possible for a military mortgage, but to obtain it you do not need to submit an application in advance. The borrower can deposit any amount into the Rosvoenipoteka account, and it will be written off in full. The new payment schedule will appear in your personal account the next day.

Under the program for military personnel, only a reduction in the mortgage payment period is allowed. For this category of borrowers, this is quite profitable, because you can quickly remove the encumbrance and register ownership of the property.