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Follow up Financing: House Bank Bill Of Exchange Or Forward Loan?

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Your fixed interest rate for the mortgage loan is about to expire? These options are available for low-interest follow-up financing. Anyone who bought their house around eight to nine years ago is likely to be dealing a little more intensively with mortgage rates. Follow-up financing is pending. And for most of them, that’s every reason to celebrate. Interest rates have been at a historically low level for years. Ten years ago, buyers had to accept rates of around 4.6 per cent. Debit interest rates below two per cent are possible today.

Who can reschedule now?

In any case, property owners, whose fixed interest rate is about to expire, have to look around. But borrowers with terms of over ten years also have the chance to get rid of the more expensive loan earlier. In general, the following applies: after ten years from the full payment of the construction loan, it can be terminated.

What connection options are there?

The borrowers can extend their loan with the previous bank (prolongation) or switch to another provider (rescheduling). As a rule, the conditions at the house bank are not the worst, because they will have a great interest in keeping customers – especially if they have always reliably met their loan obligations without any disruption.

Nevertheless, it always makes sense to also look around the competition. Switching to another bank is relatively uncomplicated: the new lender replaces the loan and receives the land charge as security in return. For this, there are notary and land registry fees. Some credit institutions even cover these fees when new customers come to them. A competitive offer can also improve your negotiating position with the current lender.

When is a forward loan an option?

This is interesting for everyone who cannot get out of their existing contract yet but does not want to miss the current interest rate level. Forward loans can be taken out one to five years before they are used. Bank and customer agree on the terms for the follow-up loan today.

As a rule, commitment interest does not accrue until payment is made. The credit institutions pay for their interest rate guarantee with a slight interest rate premium. Rule of thumb: the longer the agreed forward phase, the higher the interest premium. In recent years, market experts have observed that the premium was 0.03 percentage points per month until the old loan was redeemed.

Is a home loan and savings contract also worthwhile?

This variant is interesting for security-oriented borrowers if the fixed interest rate has been in effect for more than five years.

TIP: Increase repayment after rescheduling! What borrowers save in interest by rescheduling should invest in higher repayments from the outset. This way, you can pay off your loan even faster. In other words: if you were able to shoulder the previous instalment level well, leave it the same.

Who can reschedule now?

In any case, property owners, whose fixed interest rate is about to expire, have to look around. But borrowers with terms of over ten years also have the chance to get rid of the more expensive loan earlier. In general, the following applies: after ten years from the full payment of the construction loan, it can be terminated.

What connection options are there?

The borrowers can extend their loan with the previous bank (prolongation) or switch to another provider (rescheduling). As a rule, the conditions at the house bank are not the worst, because they will have a great interest in keeping customers – especially if they have always reliably met their loan obligations without any disruption.

Nevertheless, it always makes sense to also look around the competition. Switching to another bank is relatively uncomplicated: the new lender replaces the loan and receives the land charge as security in return. For this, there are notary and land registry fees. Some credit institutions even cover these fees when new customers come to them. A competitive offer can also improve your negotiating position with the current lender.

When is a forward loan an option?

This is interesting for everyone who cannot get out of their existing contract yet but does not want to miss the current interest rate level. Forward loans can be taken out one to five years before they are used. Bank and customer agree on the terms for the follow-up loan today.

As a rule, commitment interest does not accrue until payment is made. The credit institutions pay for their interest rate guarantee with a slight interest rate premium. Rule of thumb: the longer the agreed forward phase, the higher the interest premium. In recent years, market experts have observed that the premium was 0.03 percentage points per month until the old loan was redeemed.

Is a home loan and savings contract also worthwhile?

This variant is interesting for security-oriented borrowers if the fixed interest rate has been in effect for more than five years.

TIP: Increase repayment after rescheduling! What borrowers save in interest by rescheduling should invest in higher repayments from the outset. This way, you can pay off your loan even faster. In other words: if you were able to shoulder the previous instalment level well, leave it the same.

Hello, I have been working as an investment consultant and author for more than 20 years. I love what I do and I have enriched everyone around me. A lot of money is not important, the main thing is how you use the money.

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