
Can I still afford follow-up financing?
In 2020, interest rates for real estate financing were below one percent. Even at the beginning of the year, they were still at one percent. With the ECB raising its key interest rate to combat inflation, interest rates for real estate financing also rose.
However, while the key interest rate stood at two percent in October, mortgage interest rates rose to between 3.7 and 4.2 percent, according to Finanztip. For homeowners who are facing follow-up financing in the coming months and years, this means that their monthly payments will increase significantly. This is unsettling many owners, who are wondering whether they can still afford follow-up financing.
What can I do now?
In any case, it is advisable to find out about current interest rate developments and possible follow-up financing options at an early stage. If interest rates are rising, it may be advantageous to take out follow-up financing before the fixed-interest period of your current loan expires. You should also check out different offers and seek advice from an independent financing expert.
The forward loan
With a forward loan, you can secure the current interest rates for the further financing of your property up to five years before the fixed interest period of your current loan expires. This makes sense if interest rates are expected to rise further. However, an interest premium is usually charged. It is therefore important to calculate carefully whether a forward loan is worthwhile.
Extension
An extension is the prolongation of your existing loan. The new interest rate is based on current market rates. The disadvantage is that the repayment rate increases if interest rates rise. However, the advantage is that additional costs such as those for transferring the land charge and the notary, as well as a new credit check, are not incurred. This is the case with debt restructuring.
Debt restructuring
Even if additional costs are incurred, it can make sense to look around early for offers from other banks that offer more favorable terms. However, this is only worthwhile if better terms, such as a lower interest rate, compensate for these additional costs.
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.
Notes
For reasons of readability, the generic masculine form is used in this text. Female and other gender identities are expressly included insofar as this is necessary for the statement.
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 case.
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