How to reduce your monthly mortgage payment?

Borrower's rights under the law

According to Law No. 284-FZ of October 19, 2011, the bank does not have the right to refuse a borrower early repayment of a mortgage. Upon official application, each client is allowed to close a mortgage loan with Sberbank earlier, without the consent of the lender. However, it is important to notify the institution of your desire in advance - no less than 30 days before the date of planned debt repayment. The specified period is specified in the mortgage agreement.

Important!

Some bank contracts specify a minimum amount for early repayment. In Sberbank it is 15 thousand rubles.

Some commercial banks provide a commission for early repayment in the amount of 3-5% of the payment made. But penalties do not apply to mortgages - according to the law, the lender does not have the right to fine the borrower for wanting to repay the loan before the end of the contractual relationship.

Reduced mortgage rates for the birth of a child

Since the issue of improving the demographic situation in the state directly depends on the living conditions of young families, a loyal lending system for married couples after the birth of a child was introduced in 2011.

A reduction in the mortgage loan rate is associated with the birth of the first, second and third child, subject to several conditions:

• the age of the borrower couple is up to 35 years;
• no more than 15 square meters are allocated for each family member. m.

In addition to applying for a reduction in the amount of loan payments, you can use maternity capital to ease the loan. The certificate, which is issued at the birth of the first child, allows you to significantly reduce the loan rate when applying for a mortgage loan from Sberbank, and the capital assigned with the birth of the third child allows you to completely repay the debt amount.

How to change mortgage payment terms

Paying even the minimum amount in excess of the monthly payment helps reduce the principal amount and requires recalculation of interest. Banks offer two options for early repayment:

1. With the same amount of established monthly payments, but reducing the payment period;
2. Or with their reduction, but maintaining the date of full repayment.

Both procedures are quite simple and do not require the collection of additional documentation or commission sanctions. You just need to clarify the amount required to repay the mortgage and fill out the RAP in the application or bank branch.

You can recalculate the term of a mortgage loan at Sberbank using a calculator.

Reducing the mortgage term

In case of partial early repayment, the client can shorten the mortgage term without changing the size of the monthly payment, unless otherwise specified in the mortgage agreement. Every borrower has the right to use the service, regardless of his income level and loan size. Early repayment of a mortgage with a shorter term is possible only at a bank branch upon an official application.

Payment reduction

You can reduce the payment on a mortgage loan at Sberbank at a bank branch or through the borrower’s personal account, unless otherwise specified in the loan agreement. After partial early repayment, a payment schedule with new payments can be obtained through the mobile application.

Reducing payments using maternity capital

Expert opinion

Sergey Bogdanov

Work experience at Sberbank for 12 years.

In order for the issue of repaying the mortgage with maternity capital to be officially agreed upon, it is necessary to send a certificate to the Pension Fund of the Russian Federation about the balance of the loan debt. Once approved, the subsidy is transferred to the borrower's account to pay off interest and principal.

Penalties, penalties and fines cannot be covered with maternity capital funds.

After recalculating the loan and reducing monthly installments, a new payment schedule can be obtained at the Sberbank office or in the mobile application.

It is important to know! When using maternity capital, the total term of the mortgage does not change!

Who can benefit from a mortgage payment reduction?

Almost every borrower may encounter a situation where he no longer has the opportunity to repay a previously taken loan on the same terms. There can be a lot of reasons for this, from loss of ability to work to dismissal from a previous job. But this is not a reason to panic; there are many ways to influence the size of the monthly mortgage payment at Sberbank of Russia:

• become a client of Sberbank and receive a salary or pension on its card, or simply store your own money in accounts;
• be a reliable borrower who pays their obligations on time.

The grounds for reducing the payment if the mortgage has already been taken out will be quite limited. The bank will need to provide a compelling argument for changing the previously drawn up agreement and loan repayment schedule.

There are several really good reasons:

• 
  the appearance of a baby in the family - banks undertake to issue a deferment for young families up to 3 years, with the possibility of partial payment only of the interest amount, the main part of the debt is temporarily frozen;

• if it is possible to pay a significant amount at once, you can apply to revise the terms of the loan and reduce the monthly payment accordingly;
• providing evidence of deterioration in financial situation ;
• providing additional collateral.

Reducing the mortgage term VS reducing the monthly payment

With partial early repayment, the question arises, what is more profitable, shortening the mortgage term with Sberbank or reducing the monthly payment? You can understand it with a specific example.

The borrower, on April 8, 2020, took out a mortgage for 1,500,000 rubles for 7 years, at 10.2%. If monthly payments in the amount of 25,919 rubles are made on time, according to the schedule, the overpayment will be 573,930 for the entire period of using borrowed funds.

The borrower has a deposit in the same bank in the amount of 800 thousand rubles, but its validity period ends on April 1, 2020. It turns out that in exactly one year he will contribute 800 thousand as partial early repayment.

Option 1. Reducing the term of the Sberbank mortgage.

If all the money is deposited, the final payment date will be postponed to 03/08/2021, i.e. will be reduced by 49 months. At the same time, the full overpayment will be 201,213 ₽. and will decrease by 372,717 ₽.

Option 2: How to reduce your monthly fee.

The borrower can also reduce the loan burden and reduce monthly payments. As a result, in 7 years he will replenish the bank’s capital by 317,037 rubles, the savings for the debtor will be 256,893 rubles.

Analyzing the examples given, reducing the loan term is much more profitable. But the second option also has its advantages: if you continue to pay according to the old payment schedule, making partial early repayment every month, the mortgage payment period will be reduced along with the overpayment.

Pros and cons of reducing mortgage payments at Sberbank

The main advantages of early repayment with a reduction in monthly amounts:

1. The borrower's financial situation improves.
2. There is an opportunity to use the saved funds for personal purposes.
3. The borrower can open a deposit and use the interest received to pay off the mortgage.
4. By reducing the loan burden, the client will increase his chances of receiving approval from another bank.

The only drawback : when making partial early repayment with a reduction in the mortgage term, the borrower will save a larger amount of money than by reducing monthly payments.

What is better to reduce – term or payment?

The age-old question is, what will be more profitable – reducing the monthly mortgage payment or the total loan term? In general, shortening the term is more profitable, as the amount of overpayment is reduced.

But if you reduce the size of your monthly payment, then every month you will have more free funds that you can use for early repayment.

For example, your payment is 14 thousand rubles, but every month you pay 20 thousand. You reduce the payment amount, and for the next month it is 13,800 rubles. You again deposit 20 thousand, and it will take 200 rubles more to pay off the mortgage body early. It seems like a small thing, but on a scale of several years it is very profitable.

Here’s another interesting article: How to save for retirement in Russia: a complete overview of options

So I think that reducing the monthly payment, provided that you regularly make early payments, is more profitable and psychologically calmer (you can clearly see the result of your work).

But if you decide to reduce the period, you will need to notify the bank in advance. By default, early investments reduce your monthly payments. Therefore, before reducing the mortgage term, fill out the appropriate application.

Conditions for early repayment under a mortgage agreement

Each borrower, having received a loan from Sberbank, has the right to arrange partial or full early repayment, if this does not contradict the terms of the loan.

It is important to clarify in advance the type of payments that the borrower makes each month. This is necessary in order to decide on a profitable option for early repayment.

When making an annuity payment

When applying for partial early repayment for a loan with annuity payments, the borrower can independently decide whether to reduce the monthly mortgage payment or shorten its payment period.

Partial early repayment of the loan is carried out:

• on the Sberbank Online website;
• at the regional office.

In the first case, there are restrictions:

• it is impossible to shorten the payment period online; to do this, you will need to contact the bank office with an official application;
• The minimum amount for NDP is not less than 99% of the amount of the next monthly payment.

In case of partial early repayment, additional payments are not required.

With differentiated payment

Partially early payment of the mortgage is credited to the loan account, repaying the debt of future periods, canceling the borrower's obligation to pay it at this time. The client will be able to temporarily reduce the mortgage payment, easing the financial burden.

For example

The loan payment is 20,000 + accrued interest on the remaining debt. This month, the borrower contributed 100,000 rubles, completing a partial early repayment. Therefore, over the next 4 months he only needs to pay interest on the loan. On the fifth month, the borrower will again have to pay 20,000 + interest for the period.

What determines the size of the monthly payment?

Many factors influence the upcoming amount of mortgage payments each month, namely:

1. The cost of the purchased home (depends on the area, infrastructure development, age of the house, number of floors, location of rooms, in a new building or secondary market, etc.).
2. The interest rate set by the bank.
3. Duration of loan liquidation.
4. The more the borrower contributed at the down payment, the smaller the loan will be, and, accordingly, the payments.

The payment itself consists of:

• principal amount;
• interest payments;
• commission fees.

The payment is calculated according to two key schemes indicated in the table:

In addition to the above, the client will have to spend money on:

1. Insurance. You should be very careful here, because bank employees try to oblige you to take out as many types of insurance as possible. While only insurance against the risk of damage or loss of real estate is generally mandatory.
2. Real estate valuation services. Here, the most advantageous option is to participate in shared construction, since upon delivery of the property, the living space is assessed at the expense of the developer.
3. Many organizations have established a mandatory fee for issuing a loan.
4. State duty when registering housing ownership.

Thus, the final loan amount is influenced by a lot of factors, which mainly lead to an increase in the loan amount.

The nuances of early repayment on a military mortgage

Partial early repayment is also possible for a military mortgage, but to obtain it you do not need to submit an application in advance. The borrower can deposit any amount into the Rosvoenipoteka account, and it will be written off in full. The new payment schedule will appear in your personal account the next day.

Under the program for military personnel, only a reduction in the mortgage payment period is allowed. For this category of borrowers, this is quite profitable, because you can quickly remove the encumbrance and register ownership of the property.

Saving funds on deposit

Funds to repay the mortgage are debited from the client’s personal deposit, where he deposits money. Having additional opportunities will allow you to save large amounts. Early repayment of a loan is a lengthy procedure, so you should not pay in small installments.

The best option is to put aside finances on deposit. By transferring more funds to a bank account than required, you can accumulate a significant amount in a short period. Money in a bank account is more difficult to spend than money in your immediate vicinity.

Having accumulated a significant amount of funds, you can contact the bank with an application for early repayment and a request for recalculation of payments. Provided you choose a longer period and the optimal amount of planned contributions, accumulation will not cause difficulties. Thus, you can reduce the financial burden of a mortgage loan in a fairly short period of time.

Submitting an application for early repayment of a mortgage

There are two ways to apply for early repayment of a mortgage: through Sberbank Online or at a branch.

Closing a mortgage through Sberbank Online

Early repayment through your personal account is another online service available to every Sberbank client.

In your personal account, select a mortgage and go to the partial or full repayment section. After filling out all the fields, you must confirm the application for early repayment using an SMS code.

Partial repayment

You must adhere to the following algorithm:

1. Go to the “Partially repay the loan” section.
2. We select the card from which funds will be transferred to the credit account.
3. We decide on the repayment date. You can choose any day, even the one on which the application is submitted.
4. We indicate the amount.
5. Click “Submit an application”, check the application parameters and confirm the actions via SMS.

A new schedule with a reduced monthly payment can be obtained in your personal account or bank branch.

Full repayment

Full early repayment procedure:

1. Go to the “Repay the loan in full” section and select the write-off account.
2. In the case of DAP, on the day of application you need to indicate the amount that is written in the window that appears.
3. If you choose to repay the next day, you must independently calculate the interest for the additional day.

Restrictions when completing an online application

Design features:

1. The minimum payment for partial early repayment in your personal account must be no less than 99% of the next monthly installment. To deposit a smaller amount, you must contact the bank office.
2. In case of partial early repayment through a personal account, the borrower has the right only to reduce the amount of the monthly payment.
3. Funds must be transferred before 21:00 to avoid additional interest charges.

At the Sberbank office

You can submit an application for early repayment at any bank branch, but only in the city in which the agreement was signed. If the borrower has moved, it is necessary to transfer the mortgage to the bank at the new place of registration.

Package of documents for mortgage repayment

When filling out an online application, the system does not need all the documents collected to obtain a mortgage for an apartment. But when contacting a bank office, a passport is required.

If the borrower transfers a mortgage from another city, then you will also need to present a loan agreement.

In order to find out the amount required for early repayment through the hotline, you should tell the operator the contract number and passport details.

In some cases, full early repayment allows you to return part of the cost of unused insurance. In this case, you will need to come to the bank with a complete set of mortgage documents.

How to apply for a reduction in mortgage payment at Sberbank

So, you have decided that you have a real opportunity to reduce your own workload and reduce the size of your monthly payment, then you need to thoroughly prepare.

To do this, you need to collect a certain package of documents and contact the bank branch where the loan was previously issued.

What is required for re-registration:

• passport of a citizen of the Russian Federation;
• certificate in form 2NDFL from all family members;
• certificate or employment certificate confirming the borrower’s loss of employment;
• an extract from the medical record or a medical examination report on the deterioration of the borrower’s health;
• birth certificates of young children;
• statement of the remaining amount of debt;
• a certificate from the Unified State Register of Real Estate to confirm ownership of the property if it is pledged.

The step-by-step actions will be as follows:

1. Contact the bank branch with the specified list of documents;
2. Draw up an application in the bank’s form indicating the reasons for reducing the payment amount;
3. Also register a copy of the application (this will guarantee that the application will reach its destination);
4. The bank reviews the application within 1 month;
5. If the decision is positive, the contract is renegotiated and a new debt repayment schedule is formed.

Important! If the bank initiated the refusal, then an official document with a company seal must be issued.

Advice for Sberbank mortgage holders

Recommendations for future and current Sberbank borrowers:

1. Please fill out the loan application carefully. Most refusals occur due to incorrect data being entered.
2. If you decide to take out a mortgage with no down payment, be prepared for a more thorough check of your credit history. Similar loans are issued at high interest rates.
3. The approval period for a mortgage at Sberbank is 3-5 days, during which time you should soberly assess your own financial capabilities in order to pay off the mortgage without problems.
4. When applying for partial early repayment, shorten the loan repayment period if you can afford the monthly payment.
5. When conducting any transactions with a credit account, be sure to check all the specified details.
6. After repaying your mortgage from Sberbank, be sure to take a certificate of closure of the loan, so that if a controversial situation arises, you can use official confirmation.

See also: several useful life hacks for early loan repayment from Channel One journalists.

Non-standard ways to pay off a mortgage early

You can pay off your mortgage early or partially by applying for a tax deduction or receiving interest on the deposit.

Renting out a mortgaged apartment

Clause 4.1.3 of the Sberbank loan agreement states that renting out a mortgaged apartment is prohibited. Only in rare cases does the bank allow this possibility:

• when the borrower is laid off or fired from work;
• in case of loss of part of income;
• with temporary disability.

You can legally register a mortgaged property for rent only with the permission of Sberbank. In all other cases, penalties and legal proceedings are provided.

Tax deduction for the purchase of an apartment

The maximum tax base for calculating the tax deduction for the purchase of an apartment is 2 million rubles. At the same time, if you have an official salary, you can return up to 260 thousand rubles. The amount of the refund directly depends on the taxpayer’s income level.

A good example: the borrower took out a mortgage on an apartment worth 2.7 million rubles. His salary is 70 thousand. Monthly income tax to the state budget is 9,100 rubles, and per year - 109,200 rubles. Therefore, he will be able to receive a tax deduction for 3 years:

• in the first two years - 218,400 rubles;
• last year - 41,600 rubles.

You can independently calculate the approximate amount of tax deduction for the year using an online calculator.

Tax deduction for mortgage

Maximum tax base for mortgage deduction:

• real estate purchased before 2020 - 1 million rubles;
• the transaction was completed before 2014 - 2 million rubles;
• the apartment was decorated after 2014 - 3 million rubles.

It turns out that when applying for a mortgage loan after 2014, the borrower has the right to reimburse up to 390 thousand rubles for the entire loan term.

Example: the borrower took out a mortgage on an apartment in the amount of 2.1 million rubles, the overpayment on interest amounted to 1.259 million. Having a salary of 60 thousand rubles, he will receive a tax deduction:

• for real estate - 260,000 rubles;
• for a mortgage - 163,670 rubles.

When purchasing an apartment after January 1, 2014, each spouse can apply for a tax deduction, even if only one is the borrower. Pensioners can also receive the paid 13% if no more than three years have passed since their retirement.

Deposit

With good financial capabilities, the borrower can open a bank deposit or a debit card with interest on the balance, the rate should be higher than for a mortgage. The income received at the end of the term can be used to repay the loan. If the rate is lower, then it is better to use available funds for early repayment.

How to reduce your mortgage rate

Reducing the monthly payment is one of the methods for restructuring a mortgage. Banks can take this measure because it is temporary.

Reasons for restructuring

In order for the bank to make a positive decision on an application to reduce the monthly payment, there must be substantial grounds for this measure.

The grounds for restructuring include:

Repayment methods

There are two main ways to repay loan debt:

1. Annuity payments.
2. Differentiated payments.

Currently, annuity payments are no longer the main way to repay mortgage loans. Many banks are starting to use differentiated payments.

With the annuity payment method, the amounts of regular payments do not change every month and are paid throughout the entire mortgage period.

This method has its advantages. Since inflation is high in our country, the payment amount several years after concluding a mortgage agreement will not seem so high. In addition, the bank client’s income may increase.

For a mortgage for a young family in 2020, see the article: mortgage for a young family.

In the case of a differentiated payment option, the debt itself and interest are repaid to the same extent.

Maternity capital

In families with the birth of a second and subsequent children, in the case of a birth on January 1, 2007, the opportunity arises to receive maternity capital funds.

Maternity capital is a measure of government assistance for families with children.

The amount of state assistance in 2020 is 453 thousand rubles, and it is targeted.

This amount can be used exclusively to pay off the mortgage loan. Many Russian families take advantage of this opportunity.

Using this tool you can reduce your monthly payment. However, it will only work when the debtor repays the debt with differentiated payments.

To receive mat. capital, you must submit an application to the Pension Fund for the issuance of a certificate of maternity capital to pay for the mortgage loan.

The Russian Pension Fund will review the application within two months and transfer funds to the lender’s account.

Pros and cons of early mortgage repayment

Main advantages:

• the client saves significantly on interest;
• removal of encumbrances on real estate;
• After paying off the mortgage, free funds will appear;
• after full repayment, you can rent out the apartment and receive additional income;
• the client can become the sole owner of the apartment by receiving an extract of ownership.

Flaws:

• by paying off the mortgage early, the borrower loses the opportunity to receive a tax deduction in full;
• if the debtor planned to purchase a car in the coming years, then it is better to save up funds and buy it in cash rather than arrange partial early repayment of the mortgage and apply for a car loan.

By choosing the option of reducing the monthly payment for partial early repayment, the borrower can independently reduce the terms of the mortgage payment. In this case, you need to make payments every month not according to the new payment schedule, but according to the old one, thereby reducing the overpayment.

If we consider the issue from the other side, then the borrower will come to the aid of restructuring or refinancing in another bank.

In the first option, the lender can increase the length of the mortgage term to ease the financial burden of the borrower. Such an increase will reduce the client's monthly payment.

In the case of refinancing, you can not only increase the term of the mortgage, but also reduce the interest rate on the loan.