Debting a loan can often be a good way to escape the high-interest rate of the old loan and to save money with the new loan. But is rescheduling worth all types of loans? How is it with home finance? Rescheduling mortgage loans can bring certain benefits, but it doesn’t have to. It is therefore important to consider whether it is economically viable for you.
The rescheduling of the mortgage initially depends on the loan agreement that you signed at the beginning. Of particular interest is the extent to which early repayment of the construction finance is possible. If your loan agreement states that full or partial repayment is possible ahead of time without any additional costs, the first hurdle has been taken if you want to reschedule the mortgage.
When can construction finance be repaid?
If an interest rate that is variable in the case of mortgage lending has been agreed, the borrower can reschedule the mortgage for each change in the bank’s interest rate and thus repay all or part of it.
Rescheduling a building loan and thus repaying the building loan is also possible after the fixed interest period has expired. After this period has elapsed, follow-up financing will be made for construction finance.
In principle, this means that (almost always) a new loan agreement is concluded between the borrower and the lender.
Debt construction financing or follow-up financing?
As a borrower, you should, of course, keep a close eye on finances. Because the question remains whether a mortgage loan is worthwhile at all. For you as a borrower, there must be a financial benefit from the debt rescheduling and this benefit cannot always be seen in the interest rate, regardless of whether it is a nominal or effective interest rate.
It is much more important and also advisable that mine draws up an extrapolation before you reschedule a mortgage. With this extrapolation, you can see the bottom line of the costs that you will incur if you change your debt or if you stick to building finance.
It should also be noted that if you reschedule the mortgage, the new loan agreement will also result in new costs in the form of transaction fees.
Debt construction finance: Keep an eye on the costs!
If this step is also successful and the mortgage repayment is profitable for you, then the further question arises whether you should take out the loan with your house bank or go to another bank. As a new customer, you can usually get good conditions for a loan from other banks, but you shouldn’t avoid talking to your house bank.
They can also advise you on which follow-up financing is suitable for you. In addition, an existing customer usually has the same advantage as a new customer at another bank.
Rescheduling mortgages can entail some additional costs – especially if you go to a new bank. This means that the mortgage lending value of the property can be recalculated and this can cost you the once financial advantage of the new bank. In addition to the recalculation of the mortgage lending value, the mortgages for the new bank must also be rewritten in the land register.
So you think this shouldn’t be too much of a hassle, but the costs will add up. Debting a building loan is a big project that can be very successful with a lot of calculations and comparisons. But follow-up financing can also be an alternative instead of wanting to reschedule the construction loan.