Inform well in time and secure better conditions
After the loan term has expired, there will be often still a residual debt for which follow-up financing is necessary. Your lender is obliged to contact you at least three months before the end of the loan term. He will also offer you follow-up financing, i.e. submit a new real estate loan offer. For optimal follow-up financing, you should
Inform well in time and secure better conditions. sichern.
We recommend not to wait until the debit interest / loan term period has expired and deal with as early as possible, i.e. 2-3 years in advance and get several offers in good time. You can then compare the offer of your previous lender and the new offers. This is the only way to find out about optimal conditions and save a lot of money and secure a good negotiating position.
You will figure out that in most cases the remaining debt is significantly lower than the current loan expires. As a result, you will have to pay lower interest costs and lower monthly instalments for your property when it comes to follow-up financing. You will be relieved financially.
With the expiry of the credit commitment, you can consider whether you want to finance the remaining debt in full, in part or maybe on an increased basis before the follow-up financing. You can top up the remaining loan amount without having to pay additional mortgage charges to finance possible wishes e.g. modernization, new furniture, etc. You can also reduce part of the remaining debt with saved money.
In principle, there are two types of follow-up financing: prolongation and debt restructuring. The forward loan is a special variant of follow-up financing for both variants.
- With the prolongation, you simply extend your existing contract with the current bank.
- With debt conversion, you find a new lender.
- With a forward loan, you can both prolong and reschedule / mortgage conversion. With the forward loan, you can complete your follow-up financing before your current real estate loan expires and secure the current interest rates in advance.
Interest rate expectations
For good follow-up financing, it is worth thinking about forward loans, regardless of whether the building interest is currently higher or lower than your current interest rate. And even more so when interest rate forecasts signal that building rates will rise.
If you then do not conclude a forward loan despite the forecast that general building rates will continue to rise, you can only get follow-up financing on poorer terms.
If the forecasts predict falling interest rates, it is advisable to wait better and not to act too early. Keep in mind that the lower the real estate interest rate your lender offers, the more you can pay off monthly, the less interest you will have to pay and the faster you will have paid off your debt.
Historical development of the average interest rate over the last 10 years
Our Recommendation: Finance your Property as soon as possible.
The low-interest phase is over. Rising logistics costs, raw material and energy prices and other costs inevitably lead to higher inflation rates. The pandemic and the Ukraine war are unknowns that continue to urge us to be cautious.
The hikes in key interest rates that have been carried out and that have been announced by the American central bank, the FED, and the inflation rate in the euro area, which has risen by more than 7%, are clear signals that the European Central Bank will also tighten its monetary policy. In the last few months, this development has led to rapid increases in mortgage interest rates by financial institutions in Germany.
In the first quarter of 2022, mortgage interest has more than doubled. It is currently over 2.5% for 10-year mortgage loans. In the event of possible large fluctuations, the interest rate trend towards the end of the year tends to be in the direction of 3% and higher.
Further worsening of the economic environment will possibly force the ECB to raise key interest rates earlier. As a result of these developments, further mortgage interest rate increases are expected. On top of that, real estate prices have been rising for years.
If you want to buy or refinance a property, we advise you to take care of a suitable loan as quickly as possible.
Despite everything, be careful. Rather think twice or three times whether the property suits you and whether you will feel comfortable with it financially and emotionally. If you are sure, you should not hesitate to buy your dream property soon, because good properties are rare and are sold quickly.
Comparison of the offers and the conditions
The best way to get optimal follow-up financing is to obtain further offers in good time and to find out about the current conditions on thTe market.
We would be happy to support you and compare with you the best offers from our financial analysis with those from your current lender and go through the advantages and disadvantages with you so that you can make the right choice. You can also do a preliminary comparison yourself with our calculator.
If your house bank does not want to or cannot offer you the good conditions, it is worth thinking about mortgage conversion. You would like to find out more about this under rescheduling.
FOLLOW-UP FINANCING with us
We are your independent and impartial advisor in all questions regarding follow-up financing. The earlier you come to us, the more extensive and without time pressure we can advise you. After an extensive analysis of the conditions of over 400 lenders, we will objectively present you the best loan offers. We compare the best offers from our financial analysis with those from your current lender and go through the advantages and disadvantages so that you can make the right choice.
What does our commitment cost?
By the way, our advice, commitment and mediation is non-binding and free of charge for you. We get our money from the lender for processing and brokering, no matter which lender you ultimately choose.
Our experience is your guarantee of success.
Our recommendations for optimal follow-up financing
Get offers in time:
You should start soliciting new offers three years before the loan term expires. Your previous lender will submit his offer approximately 3 months before the loan term expires.
Interest rate forecast:
Erkundigen Sie sich, wie die Zinsen sich entwickelt haben und die Zinsprognosen sind.
Consider Forward Loans:
If you think interest rates will go up, you should consider taking out a forward loan with your current or new lender.
Compare conditions exactly:
Compare not only the interest rates, but also the other costs, such as notary fees and options such as repayment rate changes or special repayment options.
Repay partial debts:
Check whether you can repay part of the remaining debt to be financed and reduce the new loan amount.
Negotiate with your previous lender
Your previous lender knows you as a good customer. If he also offers you good conditions, you can sign the new loan contract (prolongation) with him. That is the easiest way. However, if he cannot offer you good conditions, you should reschedule, i.e. switch to a favourable lender.
Invest interest savings in repayment:
If you convert the interest savings into higher repayments, you will pay back your loan faster and save a lot of money and interest costs (see the example above).
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