How Can I Extend The Repayment Tenure Of Loan
Finding problem paying back a loan? Want to extend the repayment tenure? Whenever you are experiencing any sort of hardships or unable to pay the loan, the very first step that should take is to contract your lender immediately, your lender may be able to work on another repayment plan so that you can avoid additional penalties and fee. Unfortunately, there are many lenders who will not provide loan extensions beyond what is mentioned in the promissory note.
Each lender has their own regulations and requirements for applicants. Loan approval and the term offered are generally based on what loan you are applying for and the information you provide. Most of the time lenders will extend the term of your loan in some particular situations, provided you meet their lending criteria. Such request for loan extension is commonly referred to as a restructure.
There are several benefits of extending the repayment tenure. It will help reduce the repayment amounts, which makes it a beneficial option especially when you are going through times of reduced income, illness, a career break or any other hardship. It will minimise the principal amount that you are paying by spreading it over a longer period of time. But you should be mindful, since even though your principal repayment amount might get reduced, but in reality you are likely to end up paying more in total interest charges on the loan by stretching it over a longer term.
If you are extending the repayment tenure of a mortgage loan, it will lower the monthly payments and help you to avoid possible foreclosure. Regardless of such benefits, you should be careful before deciding to extend such mortgage loan. Although there are advantages of lengthening the period of your loan, it is likely to cost you more money in the end. Therefore, considering loan extensions there are a few things that you should consider.
First of all write down the reasons behind why you want to extend the loan term. You may find it more convenient to manage your payment after extending when the repayment amount gets reduced. Note down the reasons why you are unable to maintain the current mortgage agreement. Perhaps you are ill or your employer downsized. If you are honest about the issues you are facing due to which you want to extend the loan term, your lender may be willing to help you.
Contact the lending institution and explain why you wish to extend the loan term. Make sure to provide every detail about why you are finding it difficult to make payments. You can request the lender to change your loan agreement and ask them if they are willing to give you more time to pay off your loan. If your request is accepted it will consequently lower the monthly payments.
You can also discuss about the forbearance options with the lender. Some lenders may allow you to pay only the interest on your loan until your financial situation has improved. After you are ready to start making your mortgage payments regularly again they will extend the length of the loan. Or else you may have to make large payments for the months when you were paying the interest only and not the principal balance of the loan.
Once your loan extension request is accepted, request for a written agreement. Do read the new agreement carefully before you start making payments as said by the latest loan terms. If you are confused or unsure, get help from an attorney or other financial advisor to look over the new loan terms.
Another way to extend the term of your loan is to refinance it. Refinancing may not be practical choices for all, as you will be charged for refinance the loan. Make sure you consider the number of months it will take you to get back to the closing costs to refinance or else the lower payments that come from extending shall not be worthy.
Do go through the loan modification programmes available in UK. Under such programs lenders are allowed to extend your loan, lower your interest rate and take other steps to help you to catch up with your payments.