As Polish law says, every consumer is entitled to full repayment of the mortgage. However, we often encounter a situation in which the borrower wants to take advantage of the option of faster loan repayment, but is afraid that he will have to pay additional interest. Most consumers apply for a lower total cost of taking a cash loan. What do the banks say?
In the case of faster mortgage repayment, each borrower has the right to reimburse some of the costs incurred. In this case, the total cost of the loan is reduced by the costs associated with the period by which the duration of the loan contract has been reduced, even if the consumer incurred those costs before repayment.
Early mortgage repayment and interest
No consumer is required to pay interest for the period after the loan has been repaid in full. In such a situation, if the borrower benefits from an earlier mortgage payment, no other charges may be charged for the customer’s home service.
As it results from legal provisions, the reimbursement of costs applies only to some, mainly those that are related to the duration of the loan. So if you want to take advantage of the total mortgage payment, the installment you pay will be lower. It is also possible to shorten the repayment period.
However, it is worth checking carefully the contract you have signed with the bank. Any faster mortgage repayment is not good news for the bank, because it simply earns less. Therefore, the agreement may include provisions related to the commission for faster repayment
Usually, the costs of such commission contribute from 0.5% to 3% of the total loan liability. However, more and more banks are moving away from this type of solution, so early repayment of the loan and interest should not be a problem for the borrower. Many banks offer the option of taking an online loan, which can be repaid early. Thanks to this, we can avoid additional fees that often bother our heads.
Often, banks also offer the option of a loan grace period. This type of solution is usually given to people who took out a mortgage or cash loan. The grace period is simply the period during which interest on the principal part is suspended and the customer is only obliged to pay the fees related to the interesting part of the installment.
Early repayment – is it worth it?
If the borrower has the opportunity and appropriate funds that allow for faster repayment of the loan, it is known that most of us would like to use such a solution. This allows you to throw off a rather heavy financial commitment, which usually accompanies us for many years. However, many people in this situation are wondering if paying off the mortgage before the deadline pays off.
Faster loan repayment is a profitable option, especially for those who have taken out a loan with real estate collateral. This type of loan is usually spread over a very long period of time, e.g. 25 years. Therefore, it is worth paying the installments before the expiry date, e.g. by reducing the period from 25 to 20 years.
It should also be mentioned that early repayment of a mortgage is a slightly more complicated process than a faster repayment of cash. In this situation, it is necessary to write an annex to the loan agreement.
Loan repayment calculator
If you want to repay your loan early, you should familiarize yourself with the facilities that advanced technology gives us. Once, in order to start the whole process or take the necessary information, it was necessary to make a trip to the bank. Nowadays, loan repayment simulation can definitely be helpful.
So we can use the option of calculating installments and (optionally) all possible additional fees, which we will calculate through portals having a prepayment loan calculator. Thanks to this, we can find out if (and how much) we will have to pay interest if a specific bank loan is taken and whether it is possible to avoid additional fees.
Also in a situation where we want to take advantage of the option of the early mortgage payment, the calculator may prove to be the best solution. To calculate all the obligations that an early loan repayment gives us, the calculator requires us to provide some basic information: loan amount, interest rate, number of years of the loan term, monthly payment amount and return rate.