
Keeping an eye on follow-up financing
What options do you have for follow-up financing?
You have three options for follow-up financing. The first is prolongation. This simply extends your existing contract with your current bank. The interest rates are adjusted to the current market situation. This means little effort for you and normally no new credit check. In addition, you save the costs of transferring the land charge when switching to another bank. However, offers from other banks may still be more favorable. It is therefore advisable to compare the terms and 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 registry and notary fees, as the land charge must be transferred from one bank to the other. However, this can be worthwhile if you save more through the lower interest rates than the debt restructuring costs you.
The third option is a forward loan. This allows you to take out a new loan several years before the end of the fixed interest period in order to secure the favorable interest rates available at that time. This is particularly useful if it is foreseeable that construction interest rates will rise again. This allows you to 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. This allows you to sell your property but have a right of residence or usufruct entered in the land register. This means that the buyer pays off the loan for the property while you can continue to live there. Your local professional real estate agent will be happy to inform you about the possibilities of a real estate annuity.
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Need more information?
- Wikipedia: Real estate financing
- destatis.de: Press release
- kfw.de: Subsidies for existing properties
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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