1. Banks have to charge fees for repaying loans in advance. Some banks charge fees for repaying loans in advance, which greatly reduces the interest of many people who want to repay loans in advance. Perhaps some people don't understand why banks charge fees for repaying loans in advance. Isn't it good to get the money back in advance? You know, banks are profit-making institutions that mainly absorb deposits and issue loans. If the loans are recovered in advance, how can banks make money? Moreover, even if the money is recovered in advance, the bank will lend the money again, which will not only be troublesome, but also increase a lot of costs. Therefore, banks charge fees just because they don't want people to repay loans in advance. Of course, many people don't want to repay the loan in advance because the bank charges a fee.
2. The expected rate of return on financial management can be higher than the loan interest rate, and there is no need to repay the loan in advance. The current mortgage interest rate is not very high, and some people with financial minds can completely achieve the expected rate of return on financial management exceeding the mortgage interest rate. If the expected rate of return on financial management can exceed the mortgage interest rate, you can use the wealth management income to repay the mortgage, and there is still a surplus, so why repay the loan in advance? For these people, don't say that they don't want to repay the loan in advance, but they hate that they can't lend more!
3. With inflation, it is not cost-effective to repay the loan in advance. Because of inflation, money has been depreciating. If the amount of repayment is the same every year, due to inflation, the actual repayment in the future is actually decreasing. If someone's monthly mortgage is 5 yuan, 6 yuan a year, the annual inflation rate is 3%. By the second year, the 6, yuan paid back is only equivalent to the 1, yuan in the first year, and by the thirtieth year, the 6, yuan paid back is only equivalent to the 1, yuan in the first year. Therefore, there is inflation, and the money actually paid back every year is actually decreasing. It is not cost-effective to repay the loan in advance.
second, under what circumstances do you need to repay the loan in advance? Although in general, it seems uneconomical to repay the loan in advance, it is believed that there are two situations in which it is best to repay the loan in advance.
1. In the first case, the house is for sale. First of all, if you want to sell a house, you need to pay off the loan first, otherwise the house will not pass. Some people may want to use the buyer's down payment to pay off the mortgage and then transfer the ownership, but this will obviously increase the risk of the buyer, and it is difficult for the buyer to agree, so it is not easy to find such a buyer and it is difficult to sell the house. If you have money, you might as well pay off the mortgage first, which saves time and effort.
2. In the second case, the mortgage interest rate has risen sharply. There are two kinds of mortgage interest rates: fixed interest rate and floating interest rate. If it is floating interest rate, the loan interest rate is not static. If the commercial bank raises the mortgage interest rate by itself, it will not affect the previous loan, but if the central bank raises the benchmark interest rate, even the previous loan, the loan interest rate will increase accordingly. If the loan interest rate rises sharply, it will greatly increase the loan interest. If you have money at this time, it may be more cost-effective to repay the loan in advance.