What is Mortgage Curtailment?
When a borrower makes an extra payment against the principle owing in order to lower the outstanding sum, this is known as principal curtailment. Partial curtailment is a term used to describe this situation.
Curtailment can be used to pay down a mortgage debt if the homeowner pays off the sum ahead of schedule.
Curtailment is the process of paying off a mortgage early by paying down some or all of the remaining balance.
How does Curtailment work?
Curtailment payments lower your interest rate and shorten the term of your loan. It’s crucial to note, however, that making a curtailment payment does not relieve you of your need to pay your normal mortgage payments. Regardless of curtailments, your mortgage should be paid in full each month.
Should I make Mortgage Curtailment Payments?
Adding money to your mortgage payments will help you pay off your loan faster, but you won’t notice the advantages of those extra payments for a long time — until the last dollar of principle is paid off. You will not be able to make lesser payments in the future if you pay more now. The extra money you provide will be used to lower the loan debt, and you will not be able to get it back. Make sure you don’t overextend your finances by making extra-large home loan instalments.
Making your monthly mortgage payments on time can keep you in good standing with your lender.
Prepaying a portion of the principal or paying off the full loan ahead of time is referred to as mortgage Curtailment.
Borrowers might elect for partial or complete curtailment by making additional payments of any amount. You will pay off a portion of your mortgage loan debt ahead of schedule if you opt to make extra mortgage payments.
Financial Consultant and Author