Many lending organizations provide in their contracts the possibility of postponing the maturity of the mortgage loan. The postponement of a mortgage loan makes it possible to temporarily suspend the monthly payments and may be necessary in the event of financial difficulties. Find out in this article all the terms and conditions for postponing a mortgage loan, as well as the procedure to follow to obtain it.
Why postpone the monthly payments of his mortgage?
A home loan is generally spread over many years, on average over a period of 20 years.
This substantial loan is divided into several monthly payments defined with the lender at the time of signing the contract, depending on the profile and possibilities of the borrower.
If the amount and duration of the monthly withdrawals correspond to the client’s situation when the loan contract is taken out, these terms may no longer be suitable several years later.
The borrower’s financial situation is indeed likely to change (decrease in income, overdraft, accumulation of loans, etc.) and require adjustments.
The postponement of the monthly mortgage payments then constitutes an opportunity to take a break from repaying your loan, while waiting to find a more stable financial situation.
This possibility offered by a good number of lending organizations makes it possible to face up to the vagaries of life and not to find oneself at the foot of the wall several years after the subscription of the loan contract.
The expiry of the deadline thus makes it possible to not to risk execution defaults in the repayment of the credit (withdrawals refused in the event of a large overdraft, for example) and to overcome temporary financial difficulties more calmly over a period of a few months.
Not all lending institutions offer this solution, but the following categories of mortgage loans are generally affected by the possibility of deferral of maturities:
- fixed-rate mortgage loans,
- adjustable rate home loans
- and mixed rate mortgage loans.
If you are facing a hard blow related to unforeseen financial events and you need to postpone the maturities of your mortgage, then you will need to notify your lender and negotiate the terms of the postponement with him.
How? ‘Or’ What get a deferral of monthly payments for your mortgage?
Before contacting your banking institution, check the clauses of your loan agreement that the provisional suspension of reimbursement is a foreseen possibility. If the answer is positive, you can then express your request for postponement of deadlines to the lender. This request is ideally made by mail and it is a free process.
Your bank will then offer you a amendment to the loan contract existing. This document will specify the conditions for postponing your monthly payments.
Note that there are two types of postponement possible for a mortgage:
- partial postponement : only the repayment of the mortgage in itself (the capital) is suspended, while the interest and the payment of the insurance linked to the loan are maintained.
- the total postponement : Principal repayment and interest are deferred, but insurance charges continue to be deducted each month.
Keep in mind that in case of postponement of deadlines for your mortgage, the suspended monthly payments are carried over to the end of your loan and that it therefore lengthens by as many months as the number of months during which you will have suspended repayments.
Postponing the maturity of your mortgage therefore allows you to save part of your cash flow during difficult times but also increases the final cost of your loan.
This is why it must be a carefully considered decision and it is important to assess precisely the level of your financial difficulties before taking the plunge.
Other solutions to lighten your cash flow
The maturity modulation
The deferral of a mortgage loan can be expensive for you (un deferral of 6 months increases the cost of credit by more than 5%) and is not quan imperfect response to a specific need. Before validating this solution, know that there is another alternative if you have difficulty paying your monthly payments.
This solution is the maturity modulation. It allows you to lower your borrowing costs free of charge (even if the cost of credit becomes, because of the extension of your loan, mechanically more important) and over a longer period.
The deadline extension on your consumer loans
In the event of financial difficulty, and in addition to a postponement of a mortgage, you can also postpone your maturities on your consumer loans. The consumer law is much more flexible and will allow you to shift your deadlines quickly and easily.