Early repayment of a mortgage in Sberbank Online

In 2020, my husband and I bought an apartment. We were missing 1.4 million rubles, and that’s what we borrowed from the bank at 10% per annum for eight years. On August 14, the institution transferred the money to the former owners of the apartment. If everything had gone according to the bank’s plan, we would have paid it off in full in August 2026 and overpaid 639.5 thousand rubles.

We made the last payment in October 2020 and overpaid 91.5 thousand - seven times less. At the same time, we did not win the lottery or 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 been tested.

This is not my first text in which I share 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 low salaries in the regions and that half the country lives on 15 thousand per month per family. This is a fair point, but for my husband and I, the primary goal was to pay off the debt, and not to conduct an experiment under conditions that were fair for someone else. Therefore, we proceeded from our own income, which, by the way, was very average. Results of the socio-economic development of St. Petersburg for January-August 2020 for St. Petersburg for St. Petersburg.

Luckily, financial advice is highly scalable. If you are thinking about a mortgage and you have the money for it, these recommendations will suit you. You may not be able to pay off the debt in a year, but you can do it faster if you consider it appropriate.

Decided whether to take out a mortgage

Many people have a negative attitude towards mortgages and believe that it is easier to save up or live in a rented apartment for the rest of their lives, just so as not to fall into “slavery to the bank.” Of course, everyone makes their own choice here. But it’s good when it is based on calculations and supported by common sense, and not just baseless hatred of credit products.

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

Before buying, we rented an apartment for almost three years for 22 thousand rubles a month and managed to pay 748 thousand. The required monthly mortgage payment was almost the same, which means we didn’t lose anything.
We could continue to live in a rented apartment and put the down payment money into a deposit. As a result, we would have collected the amount for which we bought the house only after 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 apply to you, but it worked great for us.
In terms of housing, mortgages have greatly improved our quality of life. For 22 thousand rubles we rented housing on the outskirts, although close to the metro. Sleeping areas have their advantages, but for us it was not the best option. With the same mortgage payment, we settled in the center. All your favorite places, establishments, institutions are within walking distance. You practically don’t waste time on the road, and if you do spend it, you walk, and don’t hang on the handrail in the subway.

So for us the decision was obvious.

If you are wondering 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 with a mortgage you can afford a one-room apartment, but on the outskirts, and the argument “but you have your own” is an empty phrase for you. How will buying a home affect your quality of life? Will it protect against problems or, on the contrary, create new ones? These are important questions that need to be answered.

Which option is the most profitable?

The bank is not obliged to meet halfway - to reduce the rate or otherwise offer benefits to the borrower. This is his will, often associated with the possibility of benefiting himself. Therefore, if there are grounds for weakening the conditions on the part of the bank, but the credit institution does not reciprocate, you need to go to court and defend your rights.

Look at the same topic: How to choose the right mortgage in [y] year? Assistance in choosing a mortgage for all banks

Of the listed methods, each has its pros and cons, but partial early repayment is always a priority, since the amount of debt and the final overpayment are reduced when the term is shortened.

Monitored the actions of the bank

Once you sign a loan agreement, both you and the bank will be bound by 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 you decide to enter into an alliance with any financial institution, you need 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%. It seems that the choice is obvious. But it turns out that the interest rate in the first bank is valid only when taking out title insurance for the transaction. In the end, a higher percentage may be more profitable.

Our house was built in 1904, so the choice of banks was small: most often, mortgages are issued for apartments in buildings no earlier than the 60s–70s. The list was reduced to one institution, but there were still enough problems there.

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 electronic document management. However, we no longer had time to make a scandal: the deal was scheduled for tomorrow, so we had to stop at 10% instead of 9.5%. Initially, they were talking about a figure close to 12% (yes, in 2020).

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

Find out if there are special conditions and what documents need to be submitted to influence the percentage. And carefully read the papers you sign. For example, we were given the wrong date for the purchase and sale transaction in the contract and made several minor errors, but we managed to catch them in time.

Is it possible to pay off a mortgage early?

All conditions for early repayment of the mortgage must be specified in the contract. As a rule, all banks provide this opportunity to their borrowers. And if a few years ago, you would have been charged penalties and fines for early repayment, now such “enslaving” conditions have sunk into oblivion. And if you decide to repay your mortgage early: in whole or in part, then you will not find any obstacles. For some banks, the minimum amount for early repayment generally starts from a symbolic 1 ruble.

Before paying off your mortgage, you need to determine 2 things for yourself:

what type of loan (mortgage) do you have: annuity or differentiated payments
from what amount is early repayment allowed?

Next, you need to notify the bank that you are going to make an early additional payment. This can be done in two ways. Or at the bank itself, by writing a statement about your desire to make a payment. Or by calling the hotline (now almost all major banks have this option).

Important. You need to notify the bank at least one day before the period during which you are required to deposit money. Those. if you pay on the 10th of each month, then the application (or call) must be completed at least on the 9th. Otherwise, the money will only be counted in the next month.

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 easy for us. If one of us lost our job, the other's income would be enough for a mortgage and food. So we simply insured ourselves in case of force majeure.

The thesis about the need to choose a comfortable payment would be excellent to illustrate with a real-life situation. Fortunately, this didn’t happen during the year. Over a longer period of time, 8, 10, 15 years, this will be very useful.

Be sure to take care of safety. Comfortable payment, reserve fund, insurance in case of death or disability - these 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 that you foresaw this.

Chose a strategy to pay off your mortgage early

Good intentions to repay the loan as quickly as possible are not enough—you need a plan. Even several are better. Firstly, it will help you evaluate what you are actually going to work so hard for. When you see the amounts saved on interest and the shortened time frame, motivation is much higher. Secondly, calculations will show how hard it is worth pushing on the path to early repayment.

We were going to pay early every month and reduce the payment amount. But at the same time, the difference between the down payment and the current one would also go toward paying off the mortgage. In fact, for us the payment would still remain fixed. Next, I made two plans (they are both in Google Sheets):

The monthly payment amount is 21,243 rubles plus 20 thousand. In this case, we would pay off the mortgage in 3 years and 6 months with an overpayment of 253 thousand.
The monthly payment amount is 21,243 rubles plus 40 thousand. We would have paid 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 will save. Even if you cannot make advance payments 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 the small difference between these two plans - just over a year and 84 thousand rubles. And if 20 thousand really radically changes the situation, then at 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 case, a mortgage takes several years, it is better to choose a more gentle option and live fully than to tighten your belt for many, many months.

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

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

Main mistakes when repaying early

The biggest mistake borrowers make is not thinking about paying off their mortgage early. This leads to unnecessary expenses. But there are other mistakes that bank clients regularly make when performing this operation:

Forgotten monthly payment. Early repayment does not exempt you from paying it. For example, the borrower has a monthly payment of 15 thousand rubles on the 23rd, and on the 22nd he contributed 50 thousand rubles to pay the debt in advance. On the 23rd, he still needs to pay 15 thousand rubles of the monthly payment (or another amount if the funds for early payment were used to reduce the payment). In some banks, only interest can be paid in the payment following the operation of early repayment of the debt.
Repay the loan in any amount. This doesn't always help you save money. Most banks write off first the interest accrued on the date of the transaction. As a result, the client often pays them only to the bank before the scheduled date.
Accumulation of a large amount to complete an operation. It is important to understand that interest accrues daily on the outstanding balance. The later the payment is made, the smaller the savings will be.
Lack of financial reserve. It should be enough for 3-6 monthly installments. It is needed in case of job loss, illness and other unforeseen situations.
Top up your card account in advance. It is usually not enough to simply top up the card to withdraw funds. The required amount must appear on the account for debiting, but this takes time and can take 1-3 business days, so you need to top up the card 3-5 days before the payment date. If you do not have time to pay in advance, it is better to deposit the money directly into your account at a bank branch.

They paid the mortgage with fanaticism

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

earn more;
spend less.

Both strategies were used.

How we made money

Most banks issue a mortgage if the borrower has been working in his last job for more than four months, so that there is confidence that he has passed the probationary period. Therefore, we simply waited until the agreement was signed. Within a month after this, the husband took another job and increased his income by 1.5 times. There are certain risks here: if you are not confident in your abilities, you may be left without work 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 kept coming periodically all this time, so we weren’t worried about it.

Since I was a student, the strategy hasn’t let me down: if you feel like you don’t have enough money, start working more.

Over the years, I have become 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 works out.

I cooperate with several companies, some pay me fixed amounts, others on an itemized basis. So in my case, both strategies are effective - work more and get more. So I wrote a lot, talked to experts, did interviews, read research and documentation, and then wrote again - including at night and on weekends.

If you are worried about how your husband will be without my care, then there is no need. He was also at work: he heroically transcribed the interview for me, looked for and cut out pictures, cut gifs - in general, he helped in any way he could.

In the process, we had to abandon lower-paying projects in favor of higher-paying ones in order to work not only a lot, but also effectively. Although sometimes miracles happened and the customers themselves offered more.

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

How we spent

For all the remaining months, I gave away every penny of my salary, and “to the penny” is not a metaphorical expression here. The husband initially had only the amount of the mandatory payment, but then he increased his contribution.

For several months we tried to live on 18 thousand, but it was really sad, so we increased our expenses to 22 thousand. We used them to eat, travel on public transport, buy household chemicals, and have fun. The last item of expenditure was hit the hardest. Before the mortgage, we went to the theater at least once a month, and often went to the cinema or museum, or to festivals. We visited the theater twice this year. But they began to go to cinemas more often for cheap morning shows. We didn’t buy clothes (and I also didn’t buy cosmetics) for almost the entire year, with the exception of a short shopping break (I wrote about this in detail).

We decided to save wisely on food, because it is one of our basic needs. You still can’t make millions out of this, but it’s easy to make life unbearable. Let’s say, I wasn’t ready to give up cucumbers, even if we are talking about January cotton ones.

All this was more unusual than terrible.

And here again it’s worth returning to the conversation that was at the beginning. Probably, in the opinion of a family living on 15 thousand, we were even chic. But compared to our usual way of life, it was a bit difficult. It’s difficult to explain to yourself why you can’t buy some crap for 100 rubles, although it’s obvious what you’re fighting for (for a beautiful headline, as we understood above).

And here we get to the main thing: 100 rubles. They really make a difference if you want to pay off your loan faster. Literally every thing you don't buy is important. There is no expense item within which you can mindlessly rush to the checkout. Each potential acquisition must be assessed three times: is it really necessary? It infuriates, frustrates, confuses. But the result is worth it, even without any headlines.

Create a repayment plan

First, you need to find out whether it is even possible to pay off your mortgage early. Probably yes. Most banks issue loans with the possibility of early repayment even the next day. Another thing is that restrictions may be introduced that may impose significant obstacles to the implementation of this action.

For example, minimum repayment amounts may be specified or, for example, you will first need to agree on a repayment date with the bank.

When all the obstacles are removed, think about what is more profitable for you to reduce: the term or the payment. Mathematics suggests that the term is more profitable, since the number of overpayments is reduced, and therefore the volume of overpayment is reduced.

But I recommend reducing the monthly payment for the following reasons:

it’s psychologically easier this way: you see success from your actions;
expenses are reduced, and you can improve the quality of your life and make a long-awaited renovation or buy a much-needed wall-to-wall TV;
you free up funds and can use them to quickly pay off your mortgage, increasing your monthly payment by the amount saved;
in case of a critical situation, your expenses are lower than usual, and you do not incur additional debt.

In general, see for yourself which is more profitable. If you have a stable income that will not be interrupted under any circumstances, then you can choose to shorten the term. If your income is not constant or you want to have a financial cushion, then it is better to reduce your payment.

And now for specific advice.

All unexpected money was given to pay off the mortgage

Finally, we come to the point that will reveal all the cards: we are not so great. We paid off approximately 150 thousand mortgages thanks to gifts. With the exception of the money allocated for the purchase of clothes in the spring, we deposited everything that was transferred and transferred to us on our birthdays, New Year and gender holidays into the mortgage account. Tax deductions went there too.

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

Which mortgage is more profitable to take for the future in terms of early repayment?

Taking out a mortgage that you plan to pay off early must take this fact into account. When choosing loan terms, attention should be paid to the following points:

Commissions and options. It is desirable that they are absent. For example, the option to reduce the rate often does not pay off if you pay off the debt in 1-2 years.
Insurance. If you plan to quickly pay off your debt, it is advisable to refuse all additional and collective insurance, leaving only compulsory property insurance. This will help reduce costs. It is often impossible to get your insurance premium back. But you need to assess the risks so that the savings don’t go sideways.
Rules for partial payment ahead of schedule. It is better if the client can decide for himself on what day to pay off the mortgage early. This will also help you save additional money.
There should be a function to reduce the period for early repayment.

Draw conclusions

One mortgage didn’t scare us; in the future we want to take out a second one one day. During the break between loans, we think this:

The reputation of mortgages is much worse than itself. Jokes about the Doshirak diet and the like also work to create a negative image. We joked that way ourselves. But this is practically not true.
To prevent jokes about a pre-pregnancy diet from becoming a reality, you need to calculate everything in advance and take care of financial security. There can be no “maybe” or “oh well” here.
You should focus on earning more rather than saving.
Over long distances, it is necessary to maintain a normal lifestyle, including going on vacation and having fun. Because money can be earned, but time can no longer be earned.

Cut expenses

A rather hackneyed recommendation, but you can’t do without it. If you want to pay off your mortgage faster, save more money. Use all your savings for early repayment. There are no secrets here. Even 500 rubles a month is a victory. Think about what you can save on:

transport – it may be worth buying a travel card or taking a bus;
clothes and shoes - avoid buying branded items and don’t be fooled by sales;
groceries - switch to meaningful nutrition, try to purchase at a time to get discounts and big cashback;
alcohol - give it up completely;
gym - instead of jogging through the forest;
TV – do you need a zombie box;
Internet and cellular communications - find the best tariff and the best operator.

I do not urge you to save every penny and buy milk in the conventional “Pyaterochka” 1 km from your house, because it is 2 rubles cheaper than in the conventional “Magnit” in the house opposite. Count your time - it is more valuable than all the money in the world.

I once wrote about how to actually save without losing your quality of life. I recommend reading this article.

And one more note - saving should not be to your detriment. If a cup of latte in the morning puts you in the mood for work, and if you can’t get to work on time without a car, of course, you can’t refuse it. Be smart with your savings.

And here’s another interesting article: What to do if you have nothing to pay off your loan

And one more thing - use cashback cards and special programs to find profitable purchases and save on them. At least a little, but saving.