QUESTION: Early repayment: reduce the term or the payment?

The question of what is more profitable to do when you have extra money for early mortgage repayment — reducing the total loan term or lowering the monthly payment — concerns every housing loan owner. The strategy of reducing the loan term allows you to achieve maximum savings on paying interest to the bank and helps to completely free yourself from the debt burden much faster, becoming the full owner of the property without encumbrances.

The strategy of reducing the monthly payment lowers the current financial burden on your monthly budget, leaving more free money for daily needs, unforeseen situations, and building savings. This approach provides greater flexibility in financial planning, which is especially relevant for families with irregular or seasonal earnings.

The optimal solution is to choose in favor of reducing the loan term if your current budget is stable and you want to minimize the total mortgage overpayment. If your incomes fluctuate or large expenses are expected in the foreseeable future, it is better to choose a payment reduction to feel more confident and safe under any life circumstances.

It is worth remembering that according to current legislation, Russian banks are obligated to accept early repayments on any days without any commissions, penalties, or restrictions on the minimum amount. This allows you to combine both strategies depending on the current economic situation, directing bonuses or tax deductions to the goals that are most relevant to you at the moment.