The flexible loan allows the borrower to vary the monthly payments of his mortgage. He may choose to increase his repayments or to reduce them within the limits of the ceilings fixed in his loan offers.
Modulating the maturities of the flexible loan
The flexible loan is in most cases fixed rate and monthly payments can be changed from 10% to 100%, the majority of financial institutions set a limit of variation of the monthly payment to 30%.
The lending institution provides a clause in the loan offers that allows the borrower to adjust its maturity, upward or downward.
- The modulation of upward maturities leads to a decrease in the duration of financing
- Modulating downward maturities leads to longer loan terms
A second limit can be inserted in the loan offers and is based on the maximum variation in the loan term. The body can block the lengthening or the decrease of the duration to a number of years.
When can the borrower adjust his monthly payments?
Generally, maturity is possible on the anniversary date of the loan, however some contracts allow this modulation at any time.
- Do not confuse flexible loan and variable rate loan.
- The borrower must be careful that the loan insurance contract continues to cover him if he modulates his loan
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