The rescheduling of a mortgage loan can hold considerable monthly savings potential, especially in times of low interest rates. With a remaining debt of $ 100,000, almost $ 84 can be saved per percentage point of cheaper interest. However, banks are allowed to charge a high prepayment penalty during the first 10 years, which relativizes the interest savings. In order for debt restructuring to work smoothly, the borrower should note a few points.
When is debt restructuring possible?
With the You can use the detailed building rate calculator to determine the cheapest current interest rate for your building loan. in the Follow-up financing calculator, you can enter the interest rate difference to your current loan to see the cost savings in euros. If this is greater than the prepayment penalty, rescheduling is worthwhile.
The borrower can reschedule his mortgage in three ways:
- If there is a legitimate interest at any time – in this case, however, a prepayment penalty is due. A notice period of 3 months applies here.
- After ten years, the borrower can reschedule his building loan with six months’ notice.
- After the fixed interest period has expired: If the contractually agreed fixed interest period expires, the developer must repay the loan in full or take out follow-up financing and can also do so Agree Bank.
Rescheduling debt if interest is justified: Attention, prepayment penalty!
In the first ten years, the building loan can only be terminated if the interest is justified before the end of the fixed interest period. This interest is given, for example, when the financed property is sold. In this case, the bank may levy a so-called prepayment penalty. The amount of this penalty fee is not regulated by law, but should correspond to the interest received by the bank due to the premature termination.
No prepayment penalty with a flexible interest rate
The prepayment penalty is payable on every loan with a fixed interest rate. There are very few exceptions to this. The situation is different with a loan with a flexible interest rate. A free cancellation is possible at any time with a three-month period.
Debt after ten years
The ten-year period begins when the loan is paid in full. After the ten-year period, the borrower can reschedule the loan without being fined. For this he uses the special right of termination according to §489 Paragraph 1 No. 2 BGB.
There is usually little to consider here. The financing can be made freely with any financial service provider. It should only be noted that follow-up financing is prepared early enough. The remaining debt is due when the loan contract expires. If the amount cannot be paid out of one’s own assets or cannot be paid through debt rescheduling, there is a risk of foreclosure.
The prolongation: follow-up financing without debt restructuring
If you decide to stay with the same provider, you are running a so-called Prolongation. This means nothing else than that the existing loan contract is extended, but conditions such as interest and repayment are agreed again. The lender must propose or exclude a prolongation no later than three months before the end of the fixed interest period. However, the prolongation agreement can also be concluded up to twelve months before the fixed interest period expires. This makes sense especially in times of rising interest rates.
Advantages of prolongation
The advantage of prolongation is the convenience for the borrower. Since the framework credit conditions remain the same, nothing has to be re-examined here. In addition, there are no costs due to a land register rewriting that would be necessary if the provider changed. However, since this is usually only a few hundred euros, this argument is of little importance.
Disadvantages of a prolongation
Some banks speculate on the convenience of their customers and make a worse offer than the competition. It is therefore worthwhile to obtain some comparison offers and to renegotiate with the financial service provider on this basis.
The forward loan for follow-up financing
The Forward loan is a specialty in finance. It enables borrowers to secure an existing interest rate for the future. The forward loan can be agreed up to 60 months before the current follow-up financing. The borrower usually buys the interest rate security with a small interest premium of 0.01 to 0.06 percent per month.
The forward loan is made up of two periods. In the forward period, the borrower is exempt from all installment payments. At the end of the forward period, the construction loan is paid out and payment in installments begins. This means that a borrower can plan the debt rescheduling of his construction loan years in advance.
A forward loan is always worthwhile if an increase in interest rates can be expected. If, on the other hand, the construction interest falls contrary to the original assumption and the borrower does not want to accept the forward loan, he must again pay the bank a high non-acceptance fee.