Text, watch/Wang Chuhan, all media reporter of Guangzhou Daily
Recently, a news from the Bank of Communications that "early repayment of the loan requires payment of compensation" has brought the topic of "early loan repayment" to the attention again.
"Repaid 300,000 yuan of mortgage in advance, saving 500,000 yuan in interest." "After repaying the loan in advance, the monthly payment has dropped by more than 3,000 yuan, and the pressure is less." The reporter noticed that many citizens recently shared on the online platform. Your own experience of paying off your mortgage early.
So, is it worthwhile to pay off the loan early?
Which loan repayment method is better?
What are the risks that need to be avoided in the process of loan repayment?
Phenomenon: Residents' willingness to repay their mortgages ahead of schedule has increased
Ms. Jian, a citizen, said that the mortgage loan was more than 1 million yuan, and the mortgage interest rate was 5.19%. During the three-year period, the total loan repayment was 250,000 yuan. After checking the details, she found that the principal was about 50,000 yuan, and the interest was as high as more than 200,000 yuan. In the case of having spare money on hand, I chose to shorten the period of repayment and repaid the loan of 300,000 yuan in advance, saving more than 500,000 yuan in interest.
According to data from the People's Bank of China, housing loans decreased by 60.5 billion yuan in April this year, a decrease of 402.2 billion yuan year-on-year; in February this year, by sector, household loans decreased by 336.9 billion yuan, of which medium and long-term loans decreased by 45.9 billion yuan.
"There is spare money on hand, but I can't find a good investment channel", "I want to reduce the pressure of loan repayment", and "The current rate of return on wealth management is lower than the mortgage interest rate", etc., have become the main reasons why citizens choose to repay their mortgages ahead of schedule.
"The increase in residents' willingness to repay their mortgages ahead of schedule is because the yields of low-risk assets have decreased, and the mortgage interest rates have been rigidly high." Zhang Wei, a fixed income analyst at Founder Securities, pointed out that since the beginning of this year, the yields of commodity-based and wealth management products as deposit alternatives have increased. also gradually decline.
Judging from the comparison of the current mortgage interest rate and bank wealth management yield, statistics from the Shell Research Institute show that the mainstream mortgage interest rate in 30 cities in July was lowered, and the mortgage interest rate in 74 cities (58 cities in June) has been as low as 4.25% for the first set. , two sets of 5.05% minimum interest rate standard.
At the same time, the latest data from Puyi Standard shows that from August 1 to August 7, among the wealth management products of Xinfa Bank, the average performance benchmark of its closed-end net worth products in the fixed income category was 4.02%, down 0.04 points from the previous month. percentage point.
The average performance comparison benchmark of newly issued open-ended products of the bank's wealth management subsidiaries was 4.15%, up 0.26 percentage points from the previous month, and the average performance comparison benchmark of newly issued closed-ended products was 4.34%, down 0.07 percentage points from the previous month.
Analysis: Early repayments save interest
Is it worthwhile to pay off the loan early?
"Generally speaking, whether it is equal principal or equal principal and interest, early repayment of the loan will only save interest in the early stage of the loan. The number of repayments exceeds 1/3 of the loan cycle, and the remaining interest to be paid at this time is not much left, so it is not meaningful to repay the loan early." Xiao Wenxiao, chief analyst in the Guangfo area of Kerui, analyzed.
In fact, in addition to considering the loan repayment time, repaying the loan early should also consider factors such as the interest rate level.
Xiao Wenxiao said that if some citizens purchase a house, the loan interest rate floating standard is significantly higher than the current commercial loan interest rate, and they can give priority to repaying the loan in advance.
Correspondingly, the provident fund loan implements the most favorable interest rate on the market. This kind of cheap and long-term loan capital is not easy for the public to obtain, and it is generally not recommended to repay the loan in advance.
In the process of partial loan repayment in advance, citizens have two loan repayment methods to choose from: the monthly payment remains unchanged, the number of installments is reduced, and the monthly installment is reduced and the number of installments remains unchanged.
Which loan repayment method is more cost-effective?
The reporter's calculation found that, in comparison, the monthly payment is unchanged and the number of periods is reduced to save more interest.
Specifically, assuming that residents buy a house in October 2018, they need to repay a commercial loan of 1 million yuan, the loan period is 30 years, and the mortgage interest rate is 5.7%. If the loan is repaid in advance of 500,000 yuan in August this year.
By adopting the same monthly payment and reducing the number of instalments, the interest is saved by 760,000 yuan, while the monthly payment is reduced and the number of instalments is unchanged, and the interest is saved by 460,000 yuan.
"If citizens have a lot of pressure on monthly loan repayments, they can consider reducing the monthly payment and keeping the number of instalments to reduce the monthly pressure." Yan Yuejin, research director of the Think Tank Center of the E-House Research Institute, added.
Reminder: It is not compliant to use consumer loans, credit loans, etc. to repay mortgages
Some banks have recently lowered interest rates on consumer loan products, and the annualized interest rate has even fallen below 4%.
The lower annualized interest rate also "breds" some violations. Due to the illegal flow of working capital loans into the real estate sector, the Dalian Banking and Insurance Regulatory Bureau issued 9 fines to Shanghai Pudong Development Bank in a row, and 6 penalties were imposed on the Dalian Branch of Shanghai Pudong Development Bank. A total of 2.9 million yuan was fined, and the three responsible persons were fined at the same time.
Xiao Wenxiao reminded that the biggest risk of using other funds such as consumer loans and credit loans to repay housing loans in advance is that this approach does not comply with the bank's capital usage specifications. People bring huge debt repayment pressure, and records become credit stains for borrowers.
In addition, although the interest rates of consumer loans and credit loans may be more favorable in certain periods, the loan period is generally only a few years, which is incomparable with the repayment period of a mortgage loan of up to 30 years. The monthly payment is also very different, and it is not suitable for non-high-income people.
"If the bank's mortgage contract clearly stipulates that early repayment will be charged liquidated damages, and if the relevant standards do not exceed the requirements set by the government regulatory authorities, the provisions will be legally binding on both parties to the contract." Partner of Guangdong Legal Shengbang Law Firm Dai Xiaohong said that because the contract is a standard clause issued by the bank, the clause should be specially reminded.
It is legal for banks to charge liquidated damages according to the contract, but it is a bit unreasonable in terms of reason. Because banks are powerful lenders, consumers often have no choice but to accept this clause. Therefore, it is recommended that government regulatory authorities such as the China Banking and Insurance Regulatory Commission issue Relevant policies restrict this provision of banks.
Dai Xiaohong reminded that in practice, in order to maintain customer relationships and business competitiveness, many banks often waive the penalty for early repayment. It is recommended that loan users try to apply to the bank for exemption of related penalty.
In addition, for citizens who have not yet taken out a loan to purchase a house, it is recommended to focus on interest rate standards and applicable categories (such as fixed or floating interest rates), payment calculation methods (such as equal principal or equal principal and interest), and various liquidated damage standards when signing contracts. terms, and make monthly repayments according to the prescribed amount in a timely manner.
Do the math: the wealth management yield is 3.5%, which is basically the same as the income saved by early repayment of the 5.7% mortgage interest rate
As an example in the Founder Securities research report, assuming that residents buy a house in October 2018, they need to repay a commercial loan of 1 million yuan, the loan period is 30 years, and the mortgage interest rate is 5.7%.
Residents are faced with two choices. Option 1: Use cash to pay off the mortgage in one go; Option 2: Purchase wealth management products.
So which option will bring the greatest personal benefit?
Option 1: Pay off the mortgage early.
Through the mortgage calculator, the last one-off repayment (26 years remaining) was 949,400 yuan, saving 861,400 yuan in interest.
The average annual interest savings is 33,100 yuan.
Option 2: Purchase wealth management products.
With 949,400 yuan for financial management (3%-4%), the annual income can reach 28,500 to 38,000 yuan.
Founder Securities pointed out that when the wealth management yield is 3.5%, this is basically the same as the income saved by early repayment of the mortgage interest rate of 5.7%.
At the same time, Founder Securities pointed out that it is not possible to directly compare mortgage interest rates and wealth management yields, and it is necessary to jointly evaluate multiple factors such as repayment time period, repayment method, and number of repayment periods.