Extending the term to repay the mortgage is an option that we can use to pay lower monthly payments or if we need extra financing . However, the reality is that it involves paying a greater amount of interest. For this reason, it is essential to know in which cases it is a good option to extend the term to repay the mortgage and when it is not. Extending the mortgage repayment period: What is it about? When we talk about extending the repayment period of a mortgage we are referring to changing its conditions . This will mean that we have more years to repay the debt . This type of operation takes place in two cases.
Mortgage payment reduction
If we choose to extend the mortgage repayment period, in other words. Lengthen the time in which we must return the money lent to the bank. But we do not increase the capital that the bank has left us. The installments that we will pay Qatar Phone Numbers List each month they will be lower. The reason is simple, by having a greater amount of time to return the money we will have the possibility of paying less in each monthly installment. Mortgage extension Also, it is common to extend the mortgage repayment period when requesting an extension of the mortgage loan . This operation takes place when new financing is required. An example could be if we are looking to renovate the home, in this way we avoid having to apply for another mortgage. The reason is that, when requesting another mortgage, we must face some associated expenses that are higher when compared to extending the mortgage.
Disadvantages of extending the mortgage repayment period
First of all, it is true that the bank will give us more time to return the money it has lent us . However, it is necessary to be clear about an important point. When we extend the repayment period and return the Uruguay Phone Number List borrow money (principal) more slowly. We must pay a greater amount of interest overall. This is because the interest is calculated on the capital that remains to be return to the banking entity . If we pay a lower installment, we return a smaller amount of money with each installment . This means that interest is calculat on a higher remaining principal. This is why extending the term to repay the mortgage is not something that should be carried out if it is not for a good reason . Taking into account that this operation implies that, in the long term. We pay a greater amount of money for our mortgage in the form of interest.
