Grace in repayment of cash or mortgage loans



You never know what might happen: job loss, illness, sudden expense. Such unforeseen situations can damage your wallet. That is why it is worth to take care of your financial pillow. Then even in the case of various random events you will manage. How to take care of your budget and build an emergency fund you can read in our guide about 12 habits that will help you in saving .

However, what if you don’t have financial security? You can always try to communicate with the bank and apply for a loan grace period.

What is a grace period for a loan?

A grace period is a deferred payment of the principal part of the loan installment. In order for you to understand better what it consists in, it is worth looking at the construction of the loan installment.

It consists of two parts – capital and interest. When applying for a loan grace period, you defer only one of the components of the financial liability – you still have to pay the interest portion and loan insurance. This solution is used for both cash and mortgage loans, but not all banks offer them.

How to apply for a grace period in loan repayment?

bank

If your bank offers you the option of a grace period and you decide on this solution, you must apply for it. Depending on the bank, you can do it:

  • online
  • telephone
  • or stationary at a bank branch.

It is good for you to attach to the application documents that will confirm your difficult situation. They can contribute to the bank’s positive decision. It is worth noting that your previous credit settlement history will also be taken into account – no back payments.

How long is the loan grace period?

How long your capital installments will be suspended depends on the offer of the bank where you have the loan. It should be noted that depending on the type of loan, these periods differ.

With mortgages, they are longer. For example, You have the option of suspending the repayment of principal installments for up to 36 months. However, in the case of cash loans, the same bank offers a grace period of up to 3 months.

What are the pros and cons of a grace period?

Deferring payments with a grace period has its good and bad points. Therefore, before making a decision, you should carefully analyze them and see if this solution is really best for you.

Advantages of a loan grace period

It is worth to think about this solution, e.g. when you have a mortgage and you are at least in the middle of the loan period, and you have unforeseen financial problems. Grace will help you avoid late payments. Thanks to this, you won’t get into the debtors’ database and you will avoid all the unpleasant consequences of delays in settling financial obligations, such as a bailiff’s visit or debt collection procedure.

Disadvantages of grace in repayment

The disadvantages of this solution are, first and foremost, the problem being postponed – you will have to pay the outstanding installments. This will result in either increasing their amount or extending the loan period.
In addition, it is possible that you will have to bear additional costs resulting, for example, from writing an annex to the contract – it may cost up to several hundred zlotys. For many people, the biggest downside of the grace period is the design of this solution – suspending only part of the installment.