How we paid off an eight-year mortgage in a year and two months, using Lifehacker's advice

2024 Author: Malcolm Clapton | [email protected]. Last modified: 2023-12-17 03:44

Natalia Kopylova tells how a preliminary calculation and reasonable savings helped to pay off the loan ahead of schedule and not die of hunger.

In 2018, my husband and I bought an apartment. We lacked 1, 4 million rubles, and it was them that we borrowed from the bank at 10% per annum for eight years. On August 14, the institution transferred money to the former owners of the apartment. If everything went according to the bank's plan, we would have paid it in full in August 2026 and overpaid 639.5 thousand rubles.

We made the last payment in October 2019 and overpaid 91.5 thousand - seven times less. At the same time, we did not win the lottery and did not receive an inheritance, but simply zealously saved, worked hard and calculated everything at every stage. There are many articles on Lifehacker that tell you how to do this, and they work - it's checked.

This is not my first text in which I share my personal experience, so I will immediately clarify one point. If you divide 1.4 million (and with interest - 1.5 million) by 14 months, you get a fairly large amount. Someone may not finish reading the text, but immediately write in the comments about the small salaries in the regions and that half of the country lives on 15 thousand a month per family. That’s a fair point, but my husband and I had a primary goal of paying off the debt, not experimenting in conditions that would be fair to someone else. Therefore, we proceeded from our own income, by the way, quite average. Results of the socio-economic development of St. Petersburg for January-August 2019 in St. Petersburg in St. Petersburg.

Fortunately, financial advice scales well. If you are thinking about a mortgage and you have money for it, the recommendations will work for you. You may not repay the debt in a year, but you can do it faster, if you deem it appropriate.

Decided whether to take a mortgage

Many are negatively disposed towards mortgages and believe that it is easier to save up or live all their lives in a rented apartment, just not to fall into slavery to the bank. Of course, here everyone makes their choice. But it is good when it is based on calculations and supported by common sense, and not just a baseless hatred of credit products.

For us, mortgage has become the most profitable strategy. This was clear before buying an apartment and became even more obvious after. Here are some considerations:

• Before buying, we rented an apartment for almost three years for 22 thousand rubles a month and managed to give 748 thousand. The obligatory monthly payment for the mortgage was practically the same, which means that we did not lose anything.
• We could continue to live in a rented apartment, and put the down payment money on a deposit. As a result, we would have collected the amount for which we bought housing only in five years. True, there is practically no chance that we would later find a similar apartment for that kind of money.
• The motivation to save and save without a mortgage would be much lower. It's one thing when you pay off debts, and another thing when you save for the future. This may not be about you, but it worked great for us.
• In terms of housing issues, mortgages have greatly improved our quality of life. For 22 thousand rubles, we rented housing on the outskirts, although close to the metro. The sleeping areas have their advantages, but for us it was not the best option. With the same payment in the form of a mortgage, we settled in the center. All favorite places, establishments, institutions within walking distance. You practically do not waste time on the road, and if you do, then you take a walk, and do not hang on the rail in the subway.

So the decision was obvious to us.

When considering whether to take out a mortgage, consider all factors, not just material ones. Maybe you live well in a rented room not far from work, and on a mortgage you can afford a one-room apartment, but on the outskirts, and the argument “but your own” is an empty phrase for you. How will buying a home affect your quality of life? Will it protect you from problems or, on the contrary, create new ones? These are important questions that need to be answered.

We followed the actions of the bank

Once you sign the loan agreement, both you and the bank will be required to follow its terms. Therefore, in order not to get into a disadvantageous position, you need to follow literally every step of the credit manager and every line in the documents.

Of course, before deciding on an alliance with some financial institution, it is necessary to compare all offers on the market, reading every letter. Let's say one bank issues a mortgage loan at 9.5%, and another at 10.5%. The choice seems to be obvious. But it turns out that the interest rate in the first bank is valid only when the title insurance of the transaction is made. As a result, a higher percentage may be more profitable.

Our house was erected in 1904, so the choice of banks was limited: most often, mortgages are issued for apartments in buildings not earlier than the 60s and 70s. The list was reduced to one institution, but there were enough problems.

In short, initially we were considered an unreasonably high rate, although we collected the entire package of documents. I had to fight back every half a percent. As a result, the manager still managed to ignore the 2 ‑ NDFL certificate, although the fact that it was attached was easily confirmed thanks to the electronic document flow. However, we did not have time to scandalize: the deal was scheduled for tomorrow, so we had to stop at 10% instead of 9.5%. Initially, it was about a figure close to 12% (yes, in 2018).

So keep in mind: the percentage that the bank has previously calculated for you on the mortgage is not necessarily the final one. You can fight for it.

Check if there are special conditions, what documents need to be brought to influence the percentage. And carefully read the papers that you sign. For example, we were given the wrong date of the purchase and sale transaction in the contract and made a few minor mistakes, but we managed to catch them in time.

We chose the optimal payment

Our monthly payment was 21,243 rubles. We could have contributed more, but we settled on this figure as the most comfortable one. We paid almost the same amount - 22 thousand rubles - for a rented apartment, which means that these expenses would have been given to us without difficulty. If one of us lost his job, the income of the other would be enough for a mortgage and food. So we just insured ourselves in case of force majeure.

The thesis about the need to choose a comfortable payment would be perfectly illustrated by a situation in life. Fortunately, this did not appear in a year. For a longer period of time of 8, 10, 15 years, this will be very useful.

Be sure to take care of safety. Paying comfort, contingency fund, death or disability insurance are important things. You don't want to think about them when everything is fine. But if one day the situation changes, then you will not regret having foreseen it.

Looked after an apartment with renovation

The interiors of our apartment are unlikely to get many likes on Instagram. But it looked decent enough to move in and live in without spending money on renovations. Therefore, we could afford to focus on mortgages.

This point should be taken into account immediately in the calculations. If you want to repay the loan as quickly as possible, you will have to donate something. However, if you just want to freshen up the interior, it may not come out very expensive.

Chose a strategy for early repayment of the mortgage

Good intentions to pay off the loan as quickly as possible are not enough - you need a plan. Better even a few. First, it will help you assess why you are actually going to strain. When you see the amount of interest saved and the shortening time frame, the motivation is much higher. Secondly, the calculations will show how hard it is to resist on the way to early repayment.

We were going to make an advance payment on a monthly basis and reduce the amount of the payment. But at the same time, the difference between the down payment and the current one would also go towards paying off the mortgage. In fact, for us, the payment would still remain fixed. Then I made two plans (both are in the Google Sheets):

• The amount of the monthly payment is 21,243 rubles plus 20 thousand. In this case, we would have given the mortgage in 3 years and 6 months with an overpayment of 253 thousand.
• The amount of the monthly payment is 21,243 rubles plus 40 thousand. We would pay off the loan in 2 years and 2 months with an overpayment of 169 thousand.

Such calculations show everything clearly: when you pay, how much you save. Even if you cannot make advance deadlines every month and plan to do it once a quarter, a year, the numbers will put everything in its place.

Separately, it is worth noting a small difference between these two plans - just a little over a year and 84 thousand rubles. And if 20 thousand really radically change the situation, then with 40 thousand the changes are not so impressive. At the same time, 20 thousand per month (the difference between these two strategies) is a lot of money that can provide a higher standard of living.

If, in any scenario, the mortgage takes several years, it is better to choose a more lenient option and live fully than to tighten the belt for long, long months.

It is worth choosing the path of total hardships and restrictions only if we are talking about a very short distance. Or if you came up with a nice headline like “How I paid off an eight-year mortgage in a year and a half” as I did.

In fact, it turned out even faster, and this is how it turned out. In the first month, we gave ahead of schedule everything that we had left after the deal from the allocated just in case. Then for three months they regularly paid according to the second plan. And then I sat down and drew up a third schedule, in which I calculated the maximum amounts ahead of schedule that we could give without starving to death. We adhered to it to the very end, making adjustments along the way.

The mortgage was paid with fanaticism

There is no secret here. To free up more money, you need to:

• earn more;
• spend less.

Both strategies were used.

How did we make money

Most banks issue a mortgage if the borrower has been working in the last place for more than four months, so that you can be sure that he has passed the probationary period. Therefore, before signing the contract, we just waited. Within a month after that, the husband went to another job and increased his income 1.5 times. There are certain risks here: if you are not confident in your abilities, you may be left without work at all during the probationary period. Therefore, it is important to adequately understand your value in the labor market. My husband had several proposals at the same time, and they periodically come all this time, so we did not worry about this.

As a student, I was not let down by the strategy: you feel that you don't have enough money, start working harder.

Over the years, I grew wiser and realized that, ideally, one should not work more, but get more for the same amount of work done, but that's how it turns out.

I work with several companies, someone pays me fixed sums, someone article by article. So in my case, both strategies are effective - work more and get more. So I wrote a lot, talked to experts, interviewed, read research and docs, and then wrote again - even at nights and on weekends.

If you are worried about a husband without my care, then you don't need to. He was also involved: he heroically deciphered my interviews, looked for and cut out pictures, cut gifs - in general, he helped as much as he could.

In the process, it was necessary to abandon less paid projects in favor of more paid ones in order to work not only a lot, but also efficiently. Although sometimes miracles happened and the customers themselves offered more.

So if you work hard and hard it will be rewarded. If not, try working hard and hard for someone else.

How did we spend

All the remaining months I gave my entire salary to the penny, and "to the penny" is not a metaphorical expression here. The husband initially had only the amount of the obligatory payment, but then he also increased his contribution.

For several months we tried to live on 18 thousand, but it was completely sad, so we increased the expenses to 22 thousand. We ate on them, went by public transport, bought household chemicals, had fun. The last item of expenditure has been hit hardest. Before the mortgage, we went to the theater at least once a month, often went to the cinema or museum, to festivals. During this year we have visited the theater twice. But they began to go to the theaters more often for the morning cheap screenings. We did not buy clothes (and I also did not buy cosmetics) almost all year, with the exception of a short break for shopping (I wrote about this in detail).

They decided to save on food wisely, because this is one of the basic needs. Millions are still not profitable on this, and it is easy to make life unbearable. For example, I was not ready to give up cucumbers, even if we are talking about January cotton.

All this was more unusual than terrible.

And here again it is worth returning to the conversation that was at the beginning. Probably, in the eyes of a family living on 15 thousand, we were even gorgeous. But compared to our usual way of life, it was difficult. It is difficult to explain to yourself why you cannot buy some kind of garbage for 100 rubles, although it is obvious what you are fighting for (for a beautiful headline, as we understood above).

And here we get to the main thing: to 100 rubles. They really matter if you want to get the loan back as quickly as possible. Literally every thing that you didn't buy is important. There is no expense item within which you can thoughtlessly rush to the cashier. Each potential acquisition must be evaluated three times: is it really necessary? It infuriates, frustrates, leads to a stupor. But the result is worth it, even without any headlines.

All unexpected money was given to pay off the mortgage

Finally, we move on to the point that will open all the cards: we are not that great. We repaid about 150 thousand mortgages thanks to gifts. With the exception of the money allocated to buy clothes in the spring, everything that was transferred and transferred to us on birthdays, New Years and gender holidays, we deposited into a mortgage account. Tax deductions went there too.

And this is also an important point. You didn't count on random money anyway, so spend it on your mortgage, it won't cost you anything.

What to read on the topic?

Tax deductions: what it is and how to save on them

Made conclusions

One mortgage did not scare us, in the future we want to take a second one. In between loans, we think this:

• The reputation of the mortgage is much worse than itself. Jokes about the diet from "Doshirak" and the like work for a negative image. We were joking ourselves. But this is practically not true.
• To prevent jokes about the pre-fat diet from becoming a reality, you need to calculate everything in advance and take care of financial security. There can be no "maybe" and "oh well" here.
• It is worth focusing on earning more, not saving.
• Over long distances, it is necessary to maintain a normal lifestyle, including going on vacation, having fun. Because money can be earned, but time is not.