Certain conditions may be backed by a mortgage. It must be subscribed from the beginning. They allow for more flexibilities throughout the life of the loan and to guard against certain risks. Among them, the postponement of monthly payments (also called the suspension of maturity ) allows you to breathe in case of a hard blow. We detail you how it works in the article that follows.
1. Postponement of maturity for your temporary financial difficulties?
On average, borrowers subscribe to a 20-year loan. And even if the actual duration is only 7 or 8 years, it’s a long time! An unexpected event has arrived quickly and we must guard against it. When subscribing to your loan, make sure you do not have to worry about financial problems.
A job loss, a birth can upset your finances. The postponement of monthly payments, as its name suggests, allows a break in monthly payments and postpone their payment. This break can vary from one month to several months. This is a good option that allows you to avoid more serious situations such as non-payment .
2. The operation of the monthly payment
Total or partial postponement
If you need to postpone your deadlines know that there are two types of mechanism.
- Total due date: You choose not to pay anything for a set period of time to deal with a temporary financial difficulty. Thus, you do not repay the capital and do not pay interest. You still have to pay the loan insurance. At the end of this period of suspension, you resume repayment of your credit.
- Partial expiry: In this case, you stop the repayment of capital but continue to pay the interest. You also pay for loan insurance.
Not all banks agree to put in place a full and partial deferral of monthly payments. For example, with the Land Credit , you can only request a partial report.
Consequence on the duration of the loan
Of course the credit carryover has an influence on the duration of the credit. Depending on the type of report, the impact is different.
By definition, as you stop repaying the loan, the term is lengthened. However, if you choose a total carry forward, the interest will not be paid over the period and will be added to the outstanding capital . If capital increases, two solutions:
- Increase the loan duration
- Increase monthly loan payments
The second option seems unthinkable because you have precisely used this mechanism because of the difficulties to pay the monthly payments. Why increase them? The duration of the loan is lengthened.
Consequence on the cost of the loan
The sooner the suspension expires, the more it will cost. In fact, at the beginning of the loan maturities mainly consist of interest , which will therefore affect the increase of the capital to be repaid. While at the end of the loan, you repay a larger share of capital.
In addition, during a partial report, you pay interim interest . They are constant and calculated on the capital remaining due at the time of the request for postponement. These interests are added to the total cost of the loan. The partial carryover is a suspension of credit for a fixed term.
In the case of a total deferral, the outstanding capital is increased by the unpaid interest. You will therefore pay interest on interest and the cost of credit is increased. The cost of your credit depends on the interest portion in the due date.