Advantages of paying a mortgage loan with “double installments”
I have a friend who has been dreaming of having the bonus money to “indulge in” a couple of years. He always makes a list of the things he would buy, and this is what bothers me, it’s always the same list. Yesterday, I said:
Then, why don’t you renegotiate your credit at just simple installments?
He looked at me in amazement. At that moment, I assumed that I had given him a great idea. But, to my surprise, he said:
It’s amazing that you give me that advice. Double quotas are a good deal!
Of course I know. I promise never to play with the subject again.
In Peru, employees have the privilege of receiving bonuses from employer parties in the months of July and December.
In those months, many employees pay double fees; that is, double the normal monthly payment on your mortgage loans.
It’s not mandatory. It’s optional. But it is a good deal.
The double installments allow to reduce the value of the debt . By reducing the balance, less interest is paid. And, when paying less interest, the total value of the credit is lower.
That is why, in general, banks present their clients with credit calculations including double fees.
Exclusive for employees?
For independent workers the situation is different. As they do not obtain the right to the perks by law, the banks do not assume that they will pay double fees.
But, if you save or if you have resources in the months of July and December, it would be worth investing them in the mortgage loan. In fact, using available resources to pay debts will always be more profitable than having the money in a bank account, a term deposit or a trust.
Why? The interest on loans is higher than the rates that banks pay for savings
The way to pay the credit to reduce the balance of the debt is this: when delivering the money, inform that you want to make an “ advance payment ”. Verify that your desire is to pay capital, pay off debt. The extra fee you are giving must be equal to or greater than the simple fee, that of each month. At that time, the financial institution must recalculate the credit, as you have altered the balance and, therefore, interest on the debt.
If you do not clearly indicate your desire, the bank will understand that “you advanced some fees”; that is, capital was not affected, only the final credit time moved a couple of months. In that case, an effect on the decrease in interest is not achieved.
In general, you should as a rule try to pay off mortgage loans in the shortest possible time, making advance payments. Of course, as long as you are sure that the rate you have is the best in the market. The advantage is that you can always improve the conditions of your mortgage loans.