Is it better to Amortize Mortgage or Save?

Is it better to Amortize Mortgage or Save?

When it comes to having notable plus money, the eternal dilemma of pay off the mortgage, save or invest.

Any of the options cánido be posible, but first we must take into account not only our personal situation, but also the economic context of the moment.

Until a few years ago, the decision was clear: for those who had plus money saved, reducing the outstanding mortgage debt was the best option.

However, currently andno eurybor, the reference index of the average interest rate at which European banks say they grant short-term loans; between them to lend it to third parties, are negative.

This interest rate is widely used as a reference for mortgage loans that have a decisive influence on the final price of the house.

As interest is low, perhaps the option is better invest in a savings or investment product in the short term with the aim of obtaining profitability and using it later when interest rates rise, to advance mortgage capital.

What is mortgage amortization?

The mortgagealthough it results in a very large loan, it is for many the only way to fulfill the dream of owning a home. C.In order to disminuye this debt a bit, many escoge write it off This It consists of paying plus money on the real estate loan in order to disminuye the monthly installments and shorten the duration of the credit.

❯❯❯ For those who signed the mortgage before January 2013they perro deduct the investment they make in their home, obtaining greater profitability thanks to the early repayment than with any investment.

❯❯❯ But for those who signed after January 2013, another series of options are presented; One of them is to make that plus money profitable with a deposit or savings account that has an interest rate higher than the loan.

Although it is very difficult to find a product with these characteristics.

Another option is to do a high risk investment long-term as bonds, stocks, funds, etcétera.

But for this, you should not need the money for a long time and also, assuming that it is not a safe investment, but rather a bet.

What is the most convenient option?

Many people make the decision based on how important it is for them to get rid of that mortgage.

Lor more advisable is Compare the interest on your mortgage with the percentage of return that you perro geter investing for the long term in a financial product.

The difference in this equation will tell you which of the possibilities is more profitable in your case.

The cheaper your loan is, the less incentive to repay it early and the greater to invest the savings in other financial products that perro offer much more returns.

If you escoge pay off the mortgageyou must first review the conditions of the loan to find out if it has or no penalties for total or partial amortization.

This is known as amortization commission and involves paying the bank a percentage of the amortized value.

The cost of the commission depends on whether it is a variable or fixed mortgage.

Amortizing the mortgage in the first few years is usually more expensive, although today it is common to find mortgages that pay 2% or less de hecho.

Given this scenario, it is convenient to analyze whether it is convenient to pay the credit or invest the money to earn with the differential.

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 Is it better to Amortize Mortgage or Save?
  Is it better to Amortize Mortgage or Save?
  Is it better to Amortize Mortgage or Save?

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