How Does a Mortgage Extension Work? - The Smiling Heart

How Does a Mortgage Extension Work?

You may have heard of mortgage extensions, essentially a way of lengthening the terms of your loan that you took out to buy your home but perhaps you’re unsure how they work. In this article we are going to take a look at why you would need such an extension, who qualifies for it and how they work.

Let’s start with what an extension is, and why you might need to look at the possibility of using one.


In a nutshell, a mortgage extension is for people who can no longer afford their monthly mortgage payments, this could be for a number of reasons ranging from divorce to earning less money in your job. What a mortgage extension does is to reduce your monthly payments by spreading them over a longer period of time, whilst this will most certainly help you in the short term, in will result in you paying more money in the long term as a result of interest and charges.

Who Qualifies?

The qualification for a mortgage extension will vary amongst different lenders but most have similar requirements for who can apply. Generally speaking those who are 90 days or more behind their mortgage repayments will qualify, there will be checks to ensure that you haven’t done this on purpose so intently doing so is not an options. Other requirements will be that you must prove that this is your primary home and not a second home or holiday home, you will also need to prove your reasons for falling behind on your payments whether it be through job loss, medical bills or any other such reason.

How to Go About Applying for an Extension?

There are federal programs in place for those who are really struggling to upkeep their mortgage but the first people that you should be speaking to is your lenders. Remember that lenders do not want their clients getting in to debt with them, it causes them as many headaches as it does their clients and of course, receiving any money is preferable to them. Your lender will help you to find a solution to your problem and mortgage extensions are generally tailor-made for the particular set of circumstances that a client may have. It is important during this process that you are completely transparent about your financial situation and have plenty of proof of how it has recently changed. It may seem tempting to take an extension over a longer period of time to really bring down your short term payments but remember that this will mean that you are paying even more in total, the key is to bring your payments down to a manageable level. Once an agreement is in place then you will sign a new mortgage with your lender and begin paying the new monthly payment straight away. If your financial position should improve in the future then most lenders will be happy to renegotiate the terms of your mortgage or allow you to overpay each  month, thus bringing down the total cost of repayment and interest.