Dif3r
Dif3r t1_je9z0rd wrote
38 year amortization? Is that even a thing? I see you used EUR but that length seems insane to me when North America only somewhat recently started on doing 30 year loans.
Take a look at some early payment calculators too to play around with seeing what early payments can do to you for reducing interest paid to the bank and shortening the payoff period.
Personally I have a 25 year loan that I'm making some pretty aggressive extra principal payments against. When all is said and done the trajectory is that it'll be paid off in 18 years. Or we potentially have the option to "recast" our mortgage and lower payments (increasing total interest paid to the bank but decreasing pressure on us if things really go sideways).
Play around with this calculator to see how much you can save by doing extra principal payments https://www.calculator.net/mortgage-payoff-calculator.html
Note that this relies on the ability to make extra payments against the principal not prepaying for upcoming months.
These are the numbers I got playing with the calculator I linked above Loan 223k (250k - 27k downpayment) Term 38 years Interest 3.65%
Let's say you do an extra $100 a month, you could cut that down to 31 years of repayments and total interest paid to the bank is $149k which is less than the original 190k you would be giving the bank over those extra 7 years.
If you combine that with say an extra $1000 payment once a year you can shorten that even further to a repayment period of 27 years and only give the bank 127.6k in interest.
Dif3r t1_jea9tmh wrote
Reply to comment by TenDogsInATrenchcoat in Is it normal to pay an extra 66% of a home loan back to your bank? by TenDogsInATrenchcoat
Ahh I guess that's where things go wrong. I can't say how it works in Europe or whether that's common or not since I'm in NA and know more about how it works in North America but are you able to shop around to other banks for mortgages that do allow early payments against the principal? Is this early payment thing even common?
At the end of the day the bank still needs to make their money but you still need to get the best deal you possibly can so don't get pressured into taking a loan if you have time on your side.