Keep an eye on follow-up financing

At the moment, interest rates for follow-up financing are favorable. It is difficult to predict how this will develop in the coming years due to the coronavirus crisis. In the event of a rise in interest rates, follow-up financing can often be difficult. It therefore makes sense to find out about follow-up financing at an early stage.

What options do you have for follow-up financing?

You have three options for your follow-up financing. The first is the prolongation. You simply extend your existing contract with your current bank. The interest rates are adjusted to the current market situation. This means little effort for you and usually no new credit check. In addition, you are spared the costs of a land charge transfer when switching to another bank. However, offers from other banks may still be more favorable. It is therefore advisable to compare the conditions of different banks. The knowledge you gain can also be useful when negotiating with your bank.

Another option is debt restructuring. Here you take out follow-up financing with another bank. This makes sense if you can get more favorable interest rates. You will have to pay land register and notary fees, as the land charge has to be transferred from one bank to the other. However, this can be worthwhile - if the lower interest rates save you more than the debt rescheduling costs you.

The third option is the forward loan. This allows you to take out a new loan a few years before the fixed interest rate ends in order to secure the favorable interest rates at that time. This is particularly useful if it is foreseeable that building interest rates will rise again. In this way, you can secure favorable interest rates for later.

Retirement

If the bank is unable to grant you follow-up financing, a real estate annuity may be a possible solution for you. You can sell your property but have a right of residence or usufruct entered in the land register. In this way, the buyer pays off the loan for the property while you can continue to live in it. Your local professional estate agent will be happy to inform you about the possibilities of property retirement.

Are you considering how to finance your property or would you like to know how the real estate market is developing? Contact us, we will be happy to advise you!

You need further information:

https://de.wikipedia.org/wiki/Immobilienfinanzierung

https://www.destatis.de/DE/Presse/Pressemitteilungen/2019/04/PD19_150_639.html

https://www.kfw.de/inlandsfoerderung/Privatpersonen/Bestandsimmobilie/Kauf-einer-bestehenden-Immobilie/

Legal notice: This article does not constitute tax or legal advice in individual cases. Please consult a lawyer and/or tax advisor to clarify the facts of your specific individual case.

Photo: ©Photo: GinaSanders/Depositphotos