Find out how to increase a monthly mortgage loan to reduce the amount of interest and pay down debt faster.
It is common for borrowers to find themselves with a suddenly greater debt capacity, which raises the question of increasing the monthly payments of the housing loan. A fully repaid car loan, an increase in income, or even a fall in rates may be enough to justify an increase in monthly mortgage payments, this can make it possible to settle a loan more quickly and be able to undertake other projects.
Increase the monthly payment of a current mortgage
You can increase your monthly payments in three ways:
- By activating the monthly adjustment clause: certain contracts provide for example the possibility of modulating the monthly payment by more or less 10%, we can thus take advantage of this option to repay our mortgage more quickly.
- By renegotiating credit with your bank: a renegotiation of a home loan allows you to readjust the repayment conditions according to your needs, either when rates fall and/or to settle your loan more quickly. An amendment is then drawn up between the parties to formalize the transaction.
- By buying back a home loan: if buying a home loan can reduce monthly payments, take advantage of lower rates, it can also increase your monthly payments. The operation must be financially attractive because if the increase in deadlines leads to a higher total cost, then it is better to save.
Increase your monthly payments or save?
By increasing your monthly payments, you balance your credit more quickly and therefore you repay less interest, this is especially the case when the borrower is at the beginning of the repayment of his credit. In the first years, the borrowers mainly repay the interest, it is at the end of the loan that they repay the borrowed capital. Thus, depending on the option chosen to increase your monthly payments (clause, renegotiation, buyout), it will be more or less interesting to play on this lever. It is essentially the total cost of the various operations that will allow us to know if it is interesting, and this requires a simulation of the repurchase of mortgage loans.
The question of saving or increasing monthly payments is therefore not so simple, it is a comparison of the borrowing conditions, rates, and yields of different savings which will allow us to know which option is best. If the borrower is at the end of the repayment, the savings will probably be more attractive. At the start of a loan, buying a home loan can be a good solution.
Simulate a monthly increase
To obtain a higher monthly estimate, it is necessary to have recourse to a simulation of repurchase of mortgage, it is a service offered free and especially without engagement which makes it possible to quickly know if the play is worth the candle. The simulation takes into account the current situation and provides an estimate of the total cost of the credit offered, as well as the rates in force.