Bank arithmetic is depressing if you wonder about the balance of your debt. Tip from the old days – don’t be interested. But if you still want to…
For convenience, we will take a million rubles in mortgage at 12% per annum for 15 years. Monthly payment will be only 12 thousand. At the same time let’s imagine that in the same happy year our son was born.
On the day when we will celebrate his fifth birthday, a third of the mortgage term will pass, but the debt to the bank will decrease only by 12% – to 877 thousand rubles.
It turns out that we have given 720 thousand rubles to the cash desk, not counting the insurance, but have reduced the debt only by 123 thousand. Some of us will hang ourselves in the same year, some will drink up, but the most courageous will continue to mortgage.
And so the child went to school, and the mortgage hours counted down half the time. The debt was reduced to 765 thousand rubles – less than a quarter. It’s funny that we already gave more to the bank than we took.
The impression of an impressive nature that year will be that Achilles will never catch up with this turtle. It’s like people are already colonizing Mars when we bring the last 12,000 into the cash register.
But stop moping. To maintain the morale, we will read the motivational literature about Yuri Gagarin or Thor Heyerdahl and move on.
Ten years. Ten goddamn years. The son has already gone to the third grade, listens to rap and is going to get married. Banks resold our mortgage three times. The debt was reduced to 614 thousand, that is, in two-thirds of the term has not even halved. If you are still able to walk past the banks without breaking the windows – you are a kind and inflexible person. Perhaps you will be chosen for a mission to Mars.
But the good news is that the last five years will be easier. The turning point in our example is ten years and four months: from now on, interest will no longer dominate the monthly payment.
And here we are, beaten but not broken, leaving the bank with the final payment. We are free. We borrowed a million. We paid off 2.16 million. Another 70-80 thousand rubles was spent on insurance payments. We feel like fools, but we are fools with an apartment.
And here my son turned 15 years old, so we need to think about his future home… Or maybe we should make a raft of balsa logs and go to Polynesia along the Miass River with the imaginary Thor Heyerdahl or at least Yuri Lozoy?
What’s the last step to thinking about full cats-bankers who get that kind of money, and for what? Mortgages are not very risky for them, the property is pledged and insured, and the percentage of cream is collected in the first few months.
Early repayment of the mortgage after five years allows the bank in the example above to earn 60% of the amount it lent us. For banks, there is still a risk of hyperinflation, which can eat ruble debt – as it was in the late 90’s – but otherwise they are in chocolate. Especially courageous mortgages pay their bills while still waiting for the house to be rented out.
Perhaps the terminator will not go back in time to save John Connor. He will come back to prevent Sarah from taking a mortgage. Or he will be looking for the mother of the first moneylender.
But you know what? Mortgages are great. I wouldn’t want to come back in the days of my parents’ youth, when they received apartments from the state through the enterprises, overcoming administrative barriers, losing the queue because of “blatnye” or quarrels with their superiors.
When they lived in a state of uncertainty for years: the apartment could have been given in the wrong place, not like this, in a year or five.
Someone was in the dorms with the bathroom on the floor. Others lived with their parents, which was often sideways for the new family: where two people make jokes and decide everything, the swarm of adult advisers will exacerbate the situation to the limit. I never understood the anecdotes about my mother-in-law, perhaps because I never lived with my mother-in-law.
Today you also work hard and spend nerve cells to buy an apartment. But at least you live in it. You have the maneuver. You see the finish line. The loan stimulates you not to sit still, but to do something about it.
You can look at the situation differently. Before the mortgage, my wife and I used to roam the rented apartments. There are advantages to this, for example, you can find a place to live next to your job or away from smog (how naive I am).
But the rent is not so far from the mortgage payment, the apartment is not to your liking, it will not become yours, and in a year or two you will be asked for fresh air with all the junk. I remember the day when our mistress’s son was released on parole, and it turned out that the apartment was kept for him.
The questions are not the mortgage principle itself, but the amount of the bet. I understand that it depends on the big economy, and people in expensive suits will easily chew us up why the bank takes the money at 5% per annum, and gives, say, at 15%. But if you dream of a mortgage in a Western-style way, it ceases to seem like a yoke.
For example, if the rate is reduced by eight percentage points, from 12% to 4%, the monthly payment is reduced by more than one and a half times – to 7.4 thousand rubles. But in Russia, this is possible only for subsidized loans, and most importantly, even in this case, the first years of working for the bank interest.
Is the mortgage an invention of the devil? No, his prank is different: he only whispers to us to take out loans based on his own wishes and not on his own abilities. Credit money seems easy, but its weight is deceptive: consider that you take copper coins and return the gold.
In this vein, the government’s policy, which from time to time stimulates thoughtless lending for the sake of short-term growth rates, is surprising.
We’ve seen this on the example of the car industry: only car buyers received a 10% discount on the cost of a car under the Family Car program on credit. De facto, money was transferred to banks as interest compensation, and the banks, without losing sight of it, took up the rates, which ate up a hypothetical profit for the consumer.
The problem of lending is typical for the whole world: you can easily name half a dozen world economies living on account of future generations. But some of these economies hope that debt will write down history. History will write us a shish.
You have to borrow in Russia in one case: when without borrowed money you will face inevitable degradation. And the most unpleasant thing about a loan is not even overpaying it to the bank. The most unpleasant thing is that it deprives us of our freedom, forcing us to work where we are paid more, not where we are more useful.