2 Disadvantages of a Closed-End Loan

For a closed end loan there are benefits for the lenders, and disadvantages for the borrowers. While they may be simpler to manage for the lender, and make the most money for them, they prevent the borrower from being able to pay off the mortgage early. A major part of homeownership is trying to pay the mortgage off early, to work out of debt before retirement comes. The less debt you are in at the time of retirement, the better your financial situation will be. Not being able to pay the mortgage off early not only becomes a hassle, but doesn't save you any money, because you'll be paying interest the entire time, putting more money in the hands of the bank. You won't own your home for 30 years! Do yourself a favor and don't watch out for the lender. Get an open ended loan that allows for early repayment.

 

 


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