If you want to apply for a loan, you are probably full of doubts, you wonder what is the best option, the most profitable loan, the most reliable financial entity that offers the best conditions and so on. Searching and comparing financial products can be a big hassle, especially if you are not clear about the conditions and differences between each type of loan.

One of the basic decisions you will have to make when contracting a mortgage is the duration of the loan. It is essential to choose a mortgage that suits your personal circumstances and your needs.

What is the due date of a loan?

The due date of a loan is the time when the term set out in the financing contract expires and the loan must be returned in full.

If you choose a 15-year mortgage, it means that you have these 15 years to return the loan, the end of this period being the deadline for the final payment. During these 15 years, you must make a monthly payment, the amount of which will be previously established through a contract.

Types of mortgages: short-term or long-term?

A 30-year loan might seem attractive because you can receive a larger amount of money, and the monthly installments will be lower, therefore easier to pay.

But a 15-year loan also has its advantages that you shod take into account in order to decide which option suits you best, depending on your current situation, the amount of money required and the purpose of the loan.

Advantages of a 15-year mortgage

• You will pay off the mortgage faster

Mortgage rates can be a stress, but with a shorter-term loan you will get rid of them faster, which will provide peace of mind.

• You save money on interest

If you have ever contracted a loan, you are familiar with the interest and how quickly it can add up. Factors such as your score credit and unpaid rates can affect the interest rate on a mortgage. According to a leading Denver mortgage lender,  the shorter the mortgage period is, the less interest you pay.

• You build equity faster

The equivalent value is the difference between the value of your home and what you owe your loan lender. Equity is built as the value of your property raises, and the mortgage decreases. The share capital is being built slowly with a 30-year mortgage, as it takes longer to pay the main balance. But since you pay less interest on a 15-year mortgage, you can build equity sooner.

Before making a final decision and requesting a short-term mortgage, it is important to understand that a 15-year mortgage might not be suitable for every buyer. Higher monthly payment can be a major disadvantage for those who are on a tight budget.

That’s why it is important to consider all possible risks before applying for a high-rate mortgage compared to your monthly income. Loans contracted for 30 years can be riskier than those contracted for 15 years, because the probability of materializing a risk increases with the passage of time, but this aspect becomes irrelevant if you can no longer pay the rate of a short-term loan.