hi-ways.org

My WordPress Blog

Loan and Credit’s proposal for amortization law

Loan and Credit’s proposal for amortization law

A little while ago, Loan and Credit sent a letter to the Swedish Financial Supervisory Authority asking them to introduce a law on mortgage repayment. This is because the banks themselves are apparently unable to comply with a good amortization rate among their customers.

Basic position is that everyone should pay off their mortgages

Basic position is that everyone should pay off their mortgages

On the whole, I think this is an interesting thought but I can’t really agree with Loan and Credit. My basic position is that everyone should pay off their mortgages. The Banking Association already has a recommendation to its members that customers with mortgages above 75% should pay down to this minimum. This sounds perfectly reasonable, I think.

What I don’t like is that you have to have a law that says you have to repay. There can definitely be times when it is not good to amortize, although I generally think you should. So a team feels wrong to me.

Although I think that one should not have a law that forces people to amortize, I like the idea of ‚Äč‚Äčamortizing. It gives good signals to yourself when you pay off the loans and do not rely on the house’s value remaining or increasing.

Lower goals

bank

I myself have mortgages and these I will repay at a steady and fine pace with the goal of one day being completely without loans. I am then fully aware that a slightly lowered amortization rate could be good from an economic perspective if I managed to invest the other money well. But I myself prefer the increased collateral that comes with smaller loans. If I lose a few bucks on this, I take it easy, as I do not have to suffer mentally.

How to do with amortization is of course personal as there are arguments for both ways to go. But having a goal that is lower when it comes to the loan-to-value ratio seems to me to be an excellent idea. Just that it should not be a law that says so.

Leave a Reply

Your email address will not be published. Required fields are marked *