When buying a home, and the average duration of the same round between 30 and 40 years. During this period, if the economy of the mortgaged person allows it, you may want to repay early and avoid interest. In this context, a question arises: is it more interesting to reduce the installment or the term of the mortgage loan?
Given this position, it is necessary to assess the personal situation and how the decision made can affect the day to day. In the case of having a comfortable financial situation, from Hipoo they point out that it is normal to prefer to reduce the term of the mortgage, since you will end up paying less interest as it is generated for less time, allowing you to save more in the long run. However, in the case of reaching the end of the month in a hurry, from the mortgage marketplace they point out that it might make more sense to reduce the fee to be paid in order to alleviate the payments that are made on a monthly basis.
One aspect to take into account in either of the two cases “is that you preferably carry out the amortization process during the first years of the mortgage, since it is in this interval of time when the highest interest rates are faced”, they recall from the company. “At Hipoo we negotiate with financial institutions to reduce the legal commissions for amortization and cancellation, trying to ensure that our clients are exempt from them,” says Juan Ferrer, CEO of Hipoo.
Is there commission?
The commission for early repayment or withdrawal is derived from the cancellation or full or partial repayment of the loan before the agreed term. Depending on whether the mortgage is of a fixed or variable rate, canceling it in a period shorter than that established in the contract entails the payment of a commission, with maximum limits set by law.
“The usual thing is that there is a commission of 0.15% only during the first five years of the mortgage and 0.25% only during the first 3 years of it. Once these terms are over, no other can be applied to you. commission”, they explain from Hipoo.
From the company they remember that, in the case of those who bought a home before 2013, there is the possibility of taking advantage of a tax advantage if an early amortization is made: the deduction for acquisition and rehabilitation, which has a limit of 9,040 euros by statement.
On the other hand, if it is a marriage with separation of property, the reduction base may even double, 18,080 euros. However, interest and amortization fees are only deductible only for amounts that were settled the previous year, that is, if the mortgage was amortized last year, the deduction must be included in this year’s statement.
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