Extending the repayment period of the mortgage means paying much higher interest

OCU has visited several bank branches to find out how the bank behaves when a customer (with stable employment and a significant percentage of the mortgage paid) proposes extending the repayment period of their mortgage. The result is not very encouraging. Some banks intend to make a killing with customers trying to alleviate their economic situation.
The study is published in the January edition of Dinero y Derechos, OCU’s Money and Rights magazine.

A very common situation these days is that a customer of a bank from which they have taken out a mortgage wants to reduce fixed monthly expenses by extending the repayment period. Well, in many cases, financial institutions seek to exploit the precarious economic situation of their clients. They forget that by collaborating with them, banks would also gain because they could see a decrease in mortgage defaults.
OCU's experience is that some banks concede to "grant" the user an extension in the repayment period of the mortgage in exchange for significantly increasing the interest rate differential above market rates for the same repayment period.
This means that, in exchange for paying more years, you only get a reduction of only 20, 30 or 40 € per month.
OCU advises you to thoroughly review the bank’s proposed mortgage renewal to avoid financial surprises.

OCU also reminds you that the bank’s customer has other weapons at hand, such as reducing links with the bank or subrogating the existing mortgage to another bank more sensitive to their economic situation. The second option is more difficult because of the difficulties that financial institutions place when extending credit to families and its higher costs.
OCU will ask the Ministry of the Economy to promote as soon as possible a deal with the banks to limit interest rates on repayment term extension operations. With this, both sides win. You pay your monthly mortgage costs more easily and the bank reduces its non-performing loans index.
For more information (media) Eva Jimenez Tel:   917 226 061
prensa@ocu.org