Why is it better to have a longer mortgage loan? Will two overdue payments on a credit card affect your mortgage loan?

Housing loans are actually a kind of credit behavior. When applying for loans, banks will review the borrower's credit. If the mortgage payment is suspended, it will affect the individual's credit. If you want to apply for loans or other credit services in the future, there will be a bad credit record. Will two overdue credit card payments affect the mortgage? You will learn more about it below.

Contents of this article

1. Why is it better to have a long mortgage loan period?

2. Will two overdue payments on a credit card affect your mortgage?

3. What are the dangers of defaulting on mortgage payments?

Why is it better to have a long mortgage loan period?

The reason why most people generally believe that a longer mortgage loan is better is that for ordinary people with average economic income levels, if the loan term is longer, the monthly payment will be less, so the monthly repayment burden will be lighter.

However, if a shorter loan term is chosen for the same loan amount and loan interest rate, the monthly repayment will be higher and the customer will be under greater pressure to repay. If one day funds are tight and the repayment cannot be made on time, it will easily lead to overdue payment and affect personal credit.

It is recommended that customers choose a suitable loan term based on their own financial strength and repayment ability. Generally speaking, the monthly mortgage payment should not exceed 50% of the monthly salary income, otherwise it may affect the quality of life.

Of course, you should also note that although a longer mortgage loan period can reduce the monthly repayment pressure, the total interest to be repaid will be higher because of the longer period. If the customer has sufficient repayment ability, then there is no need to choose a very long loan period.

Will two overdue payments on my credit card affect my mortgage?

According to the degree of credit delinquency, it can be roughly divided into the following two situations:

1. There are only one or two credit card overdue payments. In this case, the bank will generally not refuse the loan, but may increase the loan interest rate appropriately.

2. Credit card overdue for 3 times in a row or 6 times in total within 2 years. If there are 3 overdue payments or 6 overdue payments in the credit record within 2 years, the loan may be rejected.

Bad records of overdue card use will be retained in the personal credit system of the central bank for 5 years, and it may be difficult to get a loan within these five years.

What are the dangers of defaulting on mortgage payments?

1. Default means that the borrower fails to repay the loan within the prescribed period, which is overdue repayment. The same applies to mortgage loans. Once the borrower fails to repay the loan in time, there will be a default. If there is no repayment for several consecutive months, it will affect the individual's credit record. It will be more difficult to apply for a credit card or loan in the future.

2. If the borrower fails to repay the loan on time, in addition to having to make up the difference, he or she will also face penalty interest. The borrower signed a loan contract when applying for the loan. If the owner of the property fails to repay the monthly installments on time, penalty interest will be incurred according to the provisions of the loan contract.

3. The legal process begins when the mortgage is suspended. The bank will apply to the court for an auction of the property. The proceeds from the auction will first be deducted from various expenses, such as case acceptance fees, announcement fees, preservation fees, execution fees, evaluation fees, auction fees, etc., and then used to repay the bank's loan and penalty interest. The owner of the property may not get a penny and may also face the responsibility of repaying the bank loan.

A home loan is actually a kind of credit behavior. When applying for a loan, the bank will review the borrower's credit history. If the mortgage payment is suspended, it will affect the individual's credit history. If you want to apply for a loan or other credit business in the future, there will be a bad credit record.