It is cost-effective to pay off your mortgage in advance with one year remaining. With only one year left, the interest and principal of the mortgage are almost repaid. The main purpose of early repayment at this time is to release the mortgage of the house as soon as possible, making it easier to buy and sell the house. In addition, if there is one year left on the mortgage, there is generally no penalty for early repayment, so it is okay to choose to repay early.

Things to note when preparing for early repayment

1. Lower bank benchmark interest rates

The state makes corresponding adjustments to mortgage interest rates every year based on the property market and financial relations. Mortgage interest rates will either go up or down. If we repay when the interest rate is higher, we will need to pay more interest. If the interest rate is lower, we will pay a lot less interest. Sometimes don’t underestimate this one or two points, it will save you tens of thousands. You should know that the penalty interest for early repayment is calculated based on the base interest rate. If you repay early when the interest rate is higher, your penalty will be more, and when the interest rate is lower, the penalty will be less.

2. The equal principal repayment exceeds 1/3 of the repayment period

Everyone who has ever taken a loan knows that there are generally two ways to repay a loan. The equal principal repayment means that in addition to the equal principal repayment, an equal amount of interest on the remaining money must also be paid. But as the time you repay goes on, the interest you pay will become less and less. If you have repaid 1/3 of the loan at this time, there is not much interest you need to repay, and all that is left to repay is the principal. At this time, it does not make much sense to repay the loan in advance all at once. If you think the interest is nothing, you can pay it back in advance.

3. The equal installment of principal and interest has exceeded 50% of the repayment period

Equal installment of principal and interest is another repayment method, that is, the total number of your loan and interest divided by the loan period, the monthly payment Interest and principal accrued. Similar to what was said above, if your repayment period is already halfway through, your total interest repayment will be at least over 60%. It is not cost-effective to repay the loan early in this case. Nowadays, it is not easy to get a loan from a bank or even other financial institution, and the qualifications to be reviewed are also very strict. Now that most of the interest has been repaid, it is better to put the money in a place with more investment value.

Another point to note is that many banks require repayment for more than one year before they can repay in advance. Generally, there are three opportunities for large repayments. You can repay part of the large amount first and then keep part of it. Button slowly. There is no penalty for repayment in this way. There are also some banks that have different repayment details. Some banks will have to pay a large amount of liquidated damages if you repay early. This is clearly stated in the original loan contract. You need to understand it clearly with the bank and weigh the interest and liquidated damages. After checking the gap between the two, consider whether to pay it back in advance.