Loan Repayment Period


Repayment Period 

The repayment period is estimated from the moment when the loan is granted, the funds available to the customer, the use of funds from the first or last tranche by the client, up to the final date in which the borrower undertook to repay the contracted liability. The length of the loan period, depending on the type of loan, the repayment capacity of the borrower, as well as the days that are accepted as the beginning and end of the loan, are specified in the previously made loan agreement. for a critique

And although it may seem that this is a very simple matter, it is more complicated in the case of mortgage loans. As a rule, however, the longer the loan period, the better for the person applying for a loan. Thanks to this, the client can count on a smaller monthly amount of the loan installment, because the loan amount is spread over a longer period of time. The consequence of such a solution may be increased creditworthiness, which may turn out to be strategic in the case of obtaining a loan. It is also worth bearing in mind that the longer the loan repayment period, the greater the total cost of the commitment, which in turn translates into higher amounts that we give back to the bank. In reality, however, such a large mortgage amount means that we have no choice but to choose a longer repayment period. Each of us should also remember about the limits, ie the age of the borrower when repaying the loan. In most cases, the age threshold is 70-75 years. So a person who is 60 years old will not receive a loan for a period of 25 years because of too high a risk.

If you choose the right facility, you should choose a bank that does not impose charges on the borrower when you have previously repaid the loan. During the decision for a longer repayment period, we can have a low installment but with the possibility of larger deposits, thanks to which we have some security when unexpected situations arise. In a situation where the bank charges fees, and we do not have an early loan repayment plan, we can choose the lowest monthly installment and decide on a longer loan period. For the safety of your home budget, it is worth bearing in mind that the monthly installment is not higher than 40% of our income.

In the situation of choosing a loan in a popular foreign currency, it is worth deciding for security on an option such as in the case of the aforementioned mortgage. The longer the repayment period we choose, the lower the risk will be the change in the exchange rate. It is important to fix the installment and loan so that in the event of an increase in the exchange rate does not adversely affect the timely repayment of our liability.

With regard to cash loans, the longer the loan repayment period, the smaller the installment the borrower can expect. However, in this matter, it will be more profitable to decide on a better period. Many lending banks offer lower interest rates for short-term loans. Thus, a longer period of lending means the need for additional fees and worse interest rates.

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