WITH DECEMBER THE AGUINALDO ALSO ARRIVES. DO YOU KNOW WHAT YOU ARE GOING TO DO WITH HIM? HERE WE TELL YOU HOW YOU CAN USE IT TO REPAY YOUR MORTGAGE.

Many times when the Christmas bonus arrives we want to use it to buy gifts, take a vacation and enjoy the Christmas season without remorse. However, have you considered paying it to your mortgage?

Here we tell you how you can use your Christmas bonus to repay your mortgage loan, you will not regret it!

What is a mortgage amortization?

Mortgage amortization practically consists of returning to the bank or the lender a part of the remaining capital in the mortgage loan, although the total debt can also be covered before its maturity date.

The first option is known as partial amortization , where a certain amount of money is paid that will give us the option of reducing monthly payments or reducing the term of the debt. While the second, total amortization , requires paying the same amount of the loan to pay off the debt, which would imply raising a stronger amount of money.

Reduce monthly payments or reduce payment term

One of the options when you have a partial repayment of a debt is to reduce the amount of money you pay each month , but the term of the debt will remain the same. That is, if you previously paid $ 10,000 pesos for 20 years, now you will pay $ 8,000 pesos for the same 20 years.

This solution is convenient for you if you have acquired other monthly debts, such as credit cards, since you will have more money. However, it does not reduce the interest on the loan and in the end you will not save as much, you will simply increase the margin of your monthly income.

READ ALSO 

How to use your Christmas bonus effectively to pay your house 1648

The other option is to reduce the term of the loan by paying off part of the debt. In this case, the payment you will make each month will remain the same, but you will finish paying your mortgage before the initial agreement. In other words, you will continue paying the $ 11,000 pesos per month as usual, but instead of doing it for another 20 years, you will only pay for 15.

The advantage that you will find in this option is that, by reducing the payment time, the interest calculation changes, since they will be calculated over a shorter period of time and, therefore, you will pay less money than you thought when you acquired the credit. .

  REDUCE TERM REDUCE AMOUNT
Monthly fee $ 11,340 $ 8,720
Years left to pay 18 years 25 years
Interest to pay from now on  $ 438,908.6 $ 625, 902.4
Interest paid in 30 years $ 757,040 $ 944,040

Amortization penalties

Most mortgage loans today offer to make principal payments and even pay off the loan debt without charging fees. According to Jorge Valle, commercial director of SOC Asesores Hipotecarios, banks offer payment schemes where an opening commission is charged, normally 1% on the amount loaned, thus granting the right to make payments to the capital or pay off the debt without having to pay another type of commission.

However, we recommend that you always review your contract so that you have full knowledge of what you have agreed and can make an informed decision.

Now that you have knowledge about how amortization works, we suggest you analyze your financial statements, your monthly income, the interest on your mortgage loan and other monthly debts that you have to cover. This will help you make a better decision about how it is more convenient for you to pay your Christmas bonus to your mortgage.

Remember that you can find  your ideal home for sale or rent in smartcity and the best tips for home care on the  buyproperty

Blog .