In the process of buying a home and making the decision about the mortgage that best suits our daily life, we will have many doubts. In addition, as we tell you in this post, knowing all the concepts included in a mortgage loan will help us choose the mortgage that best suits our needs. Today at Hipotecas.com we want to focus on one of those concepts: the repayment period.
What is the repayment period?
The repayment period is the time it will take to pay off the entire mortgage loan. We can choose a shorter or longer period depending on our age, with 30 years being the maximum recommended period.
How does the repayment period affect the loan?
The difference between a shorter and a longer term, for the same loan amount and with the French amortization system – used by most entities – is that the shorter the term, the higher the amount of the instalment and the lower the interest. On the contrary, the longer the term, the lower the instalments and the higher the amount of interest to be paid.
How to choose the repayment period?
The term that best suits our needs is the one that allows us to repay the money in less time but always without having to allocate more than 40% of our monthly budget to this purpose.