What happens to overall interest charges when you extend the amortization period?

When the amortization period is extended, the overall interest charges increase over the life of the loan. This occurs because a longer amortization period means that the borrower is paying interest over an extended timeframe.

When the amortization period is lengthened, the monthly payments typically decrease since the total amount owed is spread out over more months. However, because interest is calculated on the remaining principal over the life of the loan, extending the period means that interest accrues for a longer duration. Consequently, even though monthly payments may be lower, the total interest paid by the end of the loan term tends to rise significantly.

This effect is particularly pronounced on larger loans or those with higher interest rates. Essentially, while extending the amortization period can make monthly payments more manageable for borrowers, it often results in them paying significantly more in interest over the full life of the loan.