Rescheduling a Mortgage
Rescheduling a mortgage is actually a type of refinancing (see “Refinancing”), as an existing mortgage is being replaced with a new mortgage. The main difference between the two actions is that in rescheduling the loan term becomes longer, as opposed to refinancing, and monthly payments are reduced as a result of that, without making changes in other parameters.
When a borrower begins a rescheduling process, their chief consideration is the monthly cash flow of the household or business, and its resulting free income. An additional consideration is the priorities of that household or business.
It is well known that many borrowers are heavily burdened by their monthly mortgage payments, and would be happy to reduce them significantly by rescheduling their mortgage and thus preventing future financial troubles. The recommendation for these borrowers is to plan ahead and ensure they can go back to the normal mortgage (by refinancing) if things improve in the future and they are again capable of making the former monthly payments. For this purpose, they should employ mortgage programs with a minimal early redemption commission.
Additionally, many others prefer to reschedule their mortgage and reduce monthly payments as a result of economical reasons, psychological considerations or simply priorities. This also includes people who have better uses for their money than making high mortgage payments, some of whom prefer putting their money in savings accounts, although they know this is not always economically sound. Additionally, there are those who simply enjoy “living the moment”.