It is possible, in collaboration with your financial institution, to make a scheme to take out a mortgage-free loan. By taking out a mortgage-free loan, you can have interest-free periods. During these periods, you do not have to pay off the loan, which can give room and air in your daily finances. This can apply if, for example, you have another, and more expensive, debt that you would like to pay off.
However, you must continue to pay interest and fees during the installment-free periods. It has been decided by the state government that a loan must have a maximum of 10 years without repayment. This is to prevent people’s debts from growing too large and inexplicable due to continued interest rates and fees.
During the installment-free periods
You will continue to pay interest and fees on your loan. This, of course, means that your loan will be more expensive in the long run. However, it will have an overall positive effect on your debt if you use these periods to repay other loans and other debt.
Some interest-only loans offer a lower interest rate during the interest-free period. Therefore, use your mortgage repayment to repay the most expensive loans so that your total credit costs will be as low as possible.
There are, of course, the pros and cons of taking out a mortgage-free loan. You must pay particular attention to the various advantages and disadvantages of considering a mortgage-free loan. Regardless of whether it is a mortgage-free mortgage or consumer loan, most of the following advantages and disadvantages will be at stake.
Benefits of a mortgage-free loan
Of course, it is an advantage to get more air and space in the daily economy, and thus afford to pay off on other loans. This is the primary reason for many to avail of a mortgage-free loan.
For example, if you take out a mortgage and a home loan to buy a new home, it will most often be the home loan from the bank that is the most expensive, rather than the mortgage. Therefore, it is most important to get the bank loan repaid first if you want to make the cost of credit in the overall picture lower and cheaper.
The so-called “avalanche strategy” is used to repay the most expensive loan first, and as soon as possible. It is always best to pay the most expensive loans first – eg the loan (s) with the highest APR.
Another reason that could be to choose a mortgage-free loan is that you want to invest more. This investment could be in stocks or bonds. It could also be in your own retirement savings. A repayment period gives air to the economy to make investments elsewhere.
However, you should not venture into this without first consulting an expert in the field.
Disadvantages of an interest-free loan
There are, of course, drawbacks to taking out a mortgage-free loan where you do not have to pay off the loan for a certain period of time. Most importantly, you should be aware that the loan costs of the loan will increase and the total loan will ultimately be more expensive to repay.
This is because, during the interest-free periods, you only pay interest on which the loan increases, so that the principal, ie the original borrowed amount plus interest, does not decrease. It may be okay if you spend the money you have available to repay a more expensive loan. Here it is important to focus on your total debt in everything.
When the grace period ends, there may be a sudden increase in your costs. It is important to be aware of. The interest rate will usually say, so the loan will be even bigger if you do not repay it.
Please note the terms of interest-free loans
The terms are different, depending on which mortgage loan you choose. With some loans, you can use a so-called “card system”, while with other loans, certain installment-free periods already exist.
For many mortgages, it is the first 10 years that are interest-free. Consuming loans often allow you to choose which months you want as installment-free months.
Find the cheapest mortgage-free loan
It is easy and quick to google the various interest-free loans available on the market. Here you can also make a comparison between the individual, and find exactly the mortgage-free loan that suits you and your needs.