At the end of the year, people often think how to deal with possible savings. Often inserted once a certain sum to the building society to take advantage of the maximum public support for the ending year. Obvious is also exceptional payment mortgages. The reduction in the loan principal often represents considerable savings in the cost of credit. From the perspective of extraordinary repayments and interest rate fixation, there are two crucial moments. First Extraordinary installment during fixation and then special installment at the end. The moment ends fixed interest rate, it is possible to make an extraordinary payment without restrictions. It can therefore be carried out as partial redemption, and repay the loan in full. This is used for mortgage refinancing.
Extraordinary installment may be fundamentally expensive
The complicated situation arises when the end fixation away. Penalties for such extra payment is usually determined as a percentage of the paid lump sum or a percentage of principal paid per each year or month to the end of fixation. It may be tens of thousands, but also about thousands of dollars. It depends on the size of extraordinary payments and most of the time remaining until the end of the fixed interest rate. Slightly different is the situation with the so-called American mortgages. They are not assigned, but just like a mortgage loan is secured by a lien on the property. American mortgage up to a total of 1.88 million crowns from the law considers consumer credit, which means that the amount of compensation for early repayment should not exceed 1% of the early repayment of part or 0.5% if the end of maturity is less than one year .
How to extraordinary payment during fixation
In recent years, the banks' access to extraordinary repayments during the period of interest rate fixation became more forthcoming. To a limited extent, allow extra repayments without penalty. In no case, however, it is not possible to send an extraordinary payment to the account without prior agreement with the bank. "Performing an extraordinary payment can be done one after the previous communication with the bank. It is necessary to tell the bank intention to make an extraordinary payment well in advance, usually at least 30 days in advance, "says Jan Kruntorád, chairman of Gepard Finance." It is often possible extra installment during fixation done only once a year, respectively, after the payment of loan installments 12 . The above example is limited to 20% of the loan amount, "says that for some banks is 20% of the loan amount, which was the beginning of mortgages drawn down for other banks, this means 20% of the outstanding balance.
When the special installment worth?
Into account whether it pays to make an extraordinary payment, enter the number of parameters. Firstly, it is necessary to consider Award for her performance. Yet there is only a one-time penalty fee, but extraordinary payment service is also possible to pay by way of regular monthly fee. Equally important is the interest rate of the loan. The higher, the more you can pay extra payment. Its role is also played by the extraordinary installment. "If the client will pay a monthly fee of CZK 150 for the service and the extraordinary payment will then € 100 thousand and a year at the rate of 2.5% will save about 2500 crowns in interest and pay 1 800 crowns in fees, "says Jan Kruntorád and adds:" But if they perform extraordinary payment of 10,000 crowns, and at the same rate for the year will save only about 250 crowns. This amount but pay fees for nearly two months. It follows that for such a small amount is not worth it to negotiate the service extraordinary payment and pay 150 per month. "
Alternative to extraordinary installment
It is always necessary to consider whether funding for the eventual extraordinary payment is not sensible to use otherwise. "In some cases it may be advantageous arranging taking the service extraordinary installments with regular fee and excess money may prefer to save, for example, a savings account or building society," says Jan Kruntorád. "Even though the variant with extraordinary installment is not necessarily a disadvantage, it is not appropriate because of it completely give up liquidity. Money available in the account also have their importance, "adds Kruntorád.
Source: tz