Mortgage for two: are you ready for it financially?

The candy is eaten, the butterflies in your stomach have subsided, your relationship has moved into the next phase. Less dizzying, but more practical. You decide to live together or even get married, and the question of a mortgage arises.

In the previous article, we talked about how to understand that you are psychologically ready for such a decision. Today we will leave emotions aside and “on a cold head” we will discuss financial readiness.

Employment of partners

Before taking a mortgage, both partners should think about formal employment. Why?

• Firstly, it is extremely important to have a stable monthly income and prospects for at least a year of work in order to calculate a comfortable mortgage payment and not worry that there will be nothing to cover it next month.
• Secondly, many, chasing often large unofficial incomes, forget about such a thing as a tax deduction. To date, each spouse is entitled to a deduction of up to 260 rubles (for every 000 million of the cost of the apartment), as well as up to 2 rubles deduction for mortgage interest (for 390 million interest paid to the bank). Therefore, it is extremely important to plan the purchase of an apartment, apartment or house on a mortgage so that in the tax period when the purchase was made, as well as for some time after it (it is not always possible to receive a deduction in full for one year) you were officially employed.

Minimum income

In addition, your income should be able to meet your monthly payment without cutting back on basic needs. Ideally, you should always have a part of the income that can be spent either on the formation of an airbag or on the early closing of a home loan. The optimal amount of loans is considered to be no more than 40% of monthly income.

How to save up for a down payment

Inflation really has a detrimental effect on our savings, and during the time when you save money for a down payment, capital can not only depreciate, but simply become insufficient – real estate tends to rise in price from time to time.

To protect against inflation, it is best to invest in reliable bonds with a maturity close to the desired date of purchase of an apartment – a yield of 8-9% will overtake inflation and not only save capital, but also increase it.

There is no universal recipe – the main thing is to soberly assess your finances and choose the best moment for you to buy.

Sell ​​or move right away?

People are divided into those who consider the mortgage bondage, and those who consider it as an investment. In the event that the mortgaged apartment is livable and it is your only home, it is wise to consider it as an investment in stability and immediately do everything for yourself. The effort involved in finding tenants, minor repairs after them, downtime plus renting an apartment for yourself will almost always be too much to be profitable.

Therefore, if housing is the only one, in my opinion, it is reasonable to immediately move into it and invest the money saved on rent in repairs at your discretion. And if there is other housing, then it would make sense to pay the mortgage for it by renting a new apartment, saving in the meantime for major repairs, which will definitely have to be done after the tenants.

“Plan B”

Before you buy a home with a mortgage, you should be as clear as possible about all possible situations and document their outcome. Talking about future plans for the birth of children and who will pay for the loan during the decree, discussing possible illness or loss of work, you will save yourself a headache when you have to face difficulties.

The best insurance against unplanned situations is a financial airbag. You need to soberly assess your strengths and understand – if income suddenly stops coming, will you be able, say, for six months not only to provide for your basic needs, but also to pay a monthly mortgage payment?

In the event of a break in relations, the best way out was and remains a prenuptial agreement. When taking on serious mortgage obligations, you should look at the world without rose-colored glasses. By prescribing obligations to repay a loan in case of separation, you do not show doubts about your partner, but, on the contrary, protect him and your interests.

Long term repayment options

Even at the stage of preparing for a mortgage, you need to calculate all the options for early repayment. If you blindly follow the payment plan set by the bank, the amount you end up paying can be up to twice the value of the apartment. A short list of actions that financial experts have personally calculated for you will help make this loan really profitable and reduce the overpayment to the bank to the maximum.

First of all, carefully read the contract when making a deal. It should allow you to pay off the loan ahead of schedule and not make other conditions unfavorable for you due to this. When choosing an early repayment method, you need to decide what is more profitable for you – to overpay the bank less or reduce the monthly payment if your financial conditions may change and you will not be able to pay the initial amount monthly.

To reduce the overpayment, it is best to shorten the term of the loan. Thus, the part of the payment going to pay the debt will increase, and the part to pay interest will decrease. Further, it will become easier to repay the loan – interest will be charged on a smaller amount, minimizing the final overpayment to the bank.

Whatever the circumstances, the financial interests of each partner must be protected. Therefore, it is worth taking care of the correct execution of the mortgage and all bank documents in advance and look to the future with confidence.