Everyone can get into a life situation where they have to borrow money. In this case, one of the main aspects of borrowing by the borrower is how much the loan installment will be. It is worth calculating that you can pay the monthly amount with certainty and not be too burdensome for the family cashier. However, it is a good idea to know that a down payment is too disadvantageous.
No credit intermediary and disbursing organization can be an exception. In all cases, the JTM (Income Proportional Rate Indicator) is based on verified monthly net income. For the purposes of the investigation, the debtors’ income and the repayment of existing loans shall be aggregated. With this decree, the MNB seeks to protect the public from over-indebtedness.
Disadvantage of low installment
The JTM rule is the payload of income
- For an unsecured personal loan: If the borrowers have a certified monthly net income of less than 400,000 HUF, then the combined repayment installment of the existing and the new loan may not exceed 50% of the certified income, or 60% patients. Income and debt are to be treated in a consolidated manner for several co-debtors.
- For mortgages: For mortgage loan applications with a maturity of over 5 years, the JTM rate is 25% and 35%, respectively (30% and 40% for higher earners, respectively). For loans with a fixed interest rate for up to 10 years or until the end of the term, the ratio is 50% up to HUF 400,000 and 60% for income above this. As of July 1, 2019, the decree allows for a monthly income of HUF 500,000 instead of the current $ 400,000.
Definition of repayment
There are several factors that control the amount of the installment. The mandatory deductible, on the one hand, and the above-mentioned debt brake, on the other hand, determine the maximum amount you can take in monthly installments.
It’s hard to be smart when it comes to defining a repayment because it’s not good if it’s too high, but neither is it too low. Both have advantages, disadvantages. It is most convenient to adjust the installment installment so that it fits into your monthly budget.
According to experts, it is not worthwhile to use the income up to the maximum load, better caution. This is because if you have a payment problem you may not be able to pay it too high in the future. If you stop paying your loan, the lender will pay you default interest and you may even be on the KHR’s negative debtor list.
The disadvantage of setting a maturity that is too long is that you pay more, even with the same APR. The reason for this is that with a long maturity, the repayment installment is lower every month, but because the time it takes to repay the loan is longer, so you have to pay more interest to the bank.
People are taking out more and more loans, for two reasons. One is that a personal loan is easier to obtain than a mortgage loan, and the amount you can borrow as a personal loan has been higher in recent years, up to $ 10 million. Another reason is the escaped real estate prices, which typically lead to very large amounts of money being taken up by clients when it comes to home loans. In the past, loan disbursements above HUF 10 million were rare, but today this can be said to be general. Therefore, because of the high loan amount, many people think it is safest to pay off the loan in small installments over a long period of time, even if it is more expensive.
Final or early repayment
People are confident that they may get a larger amount over the life of the loan, and therefore more people are using the option of early or early repayment. It is worth choosing this solution, though many are afraid of it. It is important to know that the final or early repayment comes with a fee which is not too high but you can still gain much more than you can lose. Saving a large amount or even your entire outstanding debt can save you a lot. If you can pay off only part of your loan, you will already win because there will be so much less credit that needs to be repaid, so you can even pay off less.