By drawing a long-term loan, we can never be sure how our financial situation will look like in a few years. Usually, the repayment date of our loan, especially when it comes to a mortgage, depends on the amount of installments. For we have to pay back the installments that we simply can afford. And in turn, it depends on our creditworthiness, which also the bank will analyze carefully. If he thinks that it is not enough, he may propose to extend the repayment period, which will lower our monthly financial burden. However, we must be aware that paying the loan longer, we will pay more interest in total. Why? Simply, our debt will be slower and the bank will continue to pay interest on it. Therefore, by choosing the length of loan repayment, we must consider whether we want to pay higher installments monthly and pay interest less or whether it can pay less each month, but in total give more money to the bank.
As we have already mentioned, during the repayment of debt, various things can happen in our lives. It may also worsen our financial situation. We may also have problems with the repayment of our monthly installments. Of course, this is not a perfect situation for us and most of us try to solve this problem in some way. One of the ways is to extend the repayment period. For if we spread the current debt into a larger number of installments, we will automatically reduce their amount. During financial problems, this situation can have a salutary effect for us, which will make the debt continue to be repaid on time. However, on the other hand, we must be aware that extending the loan repayment period will make it more expensive in total. Of course, if we have no choice, we should decide on such a step, but maybe it will be better to look for other solutions? What? For example, we can look for additional income to our home budget. Additional work (even several hours a week), lowering expenses (saving electricity, less frequent meals in the city), selling unnecessary things in our home are just examples of improving our income. Thanks to additional influences, we will have money for installments and we will not have to extend the repayment period.
It would seem that prolonging the repayment period is the best solution in case of financial problems. However, we must be aware that this is not an ideal solution and sometimes we should look for others. Thanks to this, we will pay off our loan earlier and pay less for it.