There are always financial weddings in which the early redemption of a loan seems possible. But is that really that easy? Could there possibly still hidden additional costs or the like to the lender? After all, a premature repayment of construction loans can currently be worthwhile. The periods of low interest rates seem to be over by the end of the year. At least, if you want to believe the statement that bond purchases until then by the ECB will come to an end. This in turn could lead to a significant increase in lending rates.
The Verbraucherzentrale Schleswig-Holstein advises for this reason to find a solution against the rise for interest on construction. And how should that work exactly?
Use building savings contracts – preferably early
Bauspar contracts for special conditions can be an aid in the early replacement of existing real estate financing. However, this usually only works after a certain contract period. Thus, many Bauspar contracts are tied for a period of at least 10 years. During this period, it is not possible to obtain an early withdrawal.
Forward loan – can that be useful?
A forward loan, albeit with some costs, is also a good solution for securing low interest rates. It is already possible about five years before the construction loan expires. So you can already secure the currently favorable interest rates. Who knows how much interest rates can rise in the next few years?
Do not forget special repayment right!
For construction loans, there is a special rule that can be found in the Civil Code. For example, borrowers are generally allowed to cancel real estate loans after a 10-year term. The time is crucial when you paid the last installment.
The notice period for the special repayment right is six months until the loan finally expires. But, one should be careful to quit as early as possible. Even half a year can be a long time. Should you not be able to replace the loan, then it is best to take care of a follow-up financing directly after the termination. So the transition can be done smoothly.
Premature replacement – and now?
In principle, it is always possible to replace a construction loan prematurely. However, a precondition is that early repayment is also provided for in the building loan contract. But is premature redemption also associated with costs? A look into the contractual clauses of mortgage lending can help here.
Thus, according to a ruling of the Frankfurt district court, it is not fair that an early administration fee or similar is payable for early repayment. Many banks have anchored these additional costs in the contractual clauses. However, according to legal judgment, the banks are now obliged to settle a loan repayment for the benefit of the customer. Any resulting management fees are, according to Frankfurt district court, already included in the interest.
Increase in the eradication – also a possibility
You know that it looks very good financially in the near future? Then right now is the right time to change something in the rates for real estate financing. If you increase the rate, then you can logically shorten the term of the construction loan. An installment reduction, if not absolutely necessary, is strongly discouraged. Otherwise you need an immensely long time to pay off the rest of the mortgage and finally have a debt-free house.