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Why does a longer repayment term need a fresh budget check?
Extending a term changes the period during which income and expenses must support payments.
A lower amount today can continue across foreseeable changes in work or household commitments.
Review the new end date and total as well as the immediate relief. Do not label the change a saving until the costs and assumptions of both positions have been compared.
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Definitions
- Cash-flow timing
- Dates when income arrives and payments leave, distinct from their total over a month.
- Budget scenario
- An explicit set of income and expense assumptions used to explore a possible payment without treating it as personal advice.