Blended Finance
How Loan Term Changes Total Cost
Loan term is one of the biggest drivers of total borrowing cost. A longer term can make monthly repayments easier, but it often increases total interest paid.
The core trade-off
Shorter terms typically mean higher monthly repayments but lower total interest. Longer terms lower monthly pressure but can increase the total amount repaid.
- Longer terms spread principal across more months
- Interest accrues for a longer period
- Fees charged monthly have more time to accumulate
- Short terms can improve total cost if affordable
- Affordability should remain realistic under stress
How to pick a practical term
Stress-test repayments against your budget before selecting a term. Include buffer for insurance, maintenance, and unexpected costs so repayments stay sustainable.
| Term strategy | Monthly effect | Total cost effect |
|---|---|---|
| Short term | Higher monthly commitment | Lower total interest in many cases |
| Mid term | Balanced repayment profile | Moderate total cost |
| Long term | Lower monthly pressure | Higher cumulative interest and fees |
Next steps
Use this guide as a framework, then compare at least two full offers with the same assumptions before you commit. If you want support, our team can help you match structure, rates, and fees to your profile.