..Anyone who took out a construction loan 10 years ago will certainly ask themselves today, in times of absolute minimum interest rates, how they can benefit from the current favorable interest rates. The good news: A construction financing debt restructuring is possible in many cases. Nevertheless, it is not done with a construction financing debt restructuring alone. In the case of the possibility one should still light up some aspects, in order to arrange the future follow-up financing optimally.
Construction financing debt restructuring is regulated by law
All consumers have according to § 489 para. 1 no. 2 BGB the right to terminate a first or. Old contract after 10 years. Thereby not only complete but also partial terminations are possible. Partial terminations make sense if you can make a high unscheduled repayment through a one-time payment and the old contract was also concluded at interest rates that correspond to today's interest rate. In addition, the repayment is already fixed at a minimum of 3 percent (if your repayment agreement is only 1 or 2 percent, then a complete cancellation is advisable to then fix the repayment at 5 percent or morenew). In this case, the contract continues to run at the original terms (interest, repayment, term), but the remaining debt is reduced by a one-time payment. Because it is always true that the faster the construction loan is fully repaid, the more favorable the complete financing is.
Often, a complete termination of the contract strive to conclude the remaining debt at another bank at more favorable interest rates. Depending on the remaining term of your initial contract, the agreed interest rate, the unscheduled repayment options as well as future rising interest rates, a termination must be weighed up carefully. This is where bank-independent construction financing intermediaries can help you. A consultation in terms of debt restructuring is always free at accedo AG.
Construction financing debt restructuring: the so-called "full reception" must be observed
In this termination, however, it should be noted that the date of termination depends on the so-called "full receipt", the payment of the last amount of the loan (which is often made in several installments). Usually, the borrower receives a letter from the bank informing him of this full disbursement. This date is binding, as a cancellation must be made 10 years later with a 6 month notice period. Of course you can cancel 7 months before.
Rescheduling with a forward loan
If you took out your initial contract during 2013 to 2016, now is also a good time to consider debt restructuring. They agree with their Baufinanzierungsberater a concept, in order to secure the current favorable interest already for the time after the notice or expiration of the old contract for the follow-up financing.
Normally, the slightly higher interest surcharges that are due for a forward loan depending on the lead time make sense (the difference whether you sign a forward loan 12 months or 24 months before expiration usually accounts for 0.2 percent more interest per forward year). Since it is now assumed that the historically low mini interest phase has now come to an end, one should become active now, obtain information on forward loans and look around for forward financing options.
Seek to speak with a non-bank construction financing advisor who can explain the timing and procedure for your best follow-on financing plan. With daily access to the terms and conditions of more than 400 banks (as is customary at ACCEDO), you can quickly decide whether the early conclusion of a forward loan makes sense in your case. At the end of the day, a forward loan is an arithmetic or. also a bet on rising interest rates in the future. Essential to your decision is the remaining term of your initial contract and the current status of the remaining debt. The amount of the remaining debt can be found in the repayment plan, which the first-financing bank hands out when the contract for the initial financing is signed. In the current interest rate situation, it makes perfect sense to reduce the remaining debt with a one-time payment (unscheduled repayment) at the end of the initial contract. Lower remaining debt also makes forward financing more affordable.
Construction financing debt restructuring: Get bank-independent advice
The complete cancellation of the old contract is the most common variant of debt restructuring. However, since it is usually not in the interest of the lending bank to cancel a construction loan with a 10-year or even longer term, it is also essential to find another financing partner such as. B. bank-independent credit intermediaries resp. Direct financiers, inquire and get a non-binding and free offer for follow-up financing. Thus, z. B. ACCEDO AG specializes in advising and carrying out a refinancing incl. Complete termination of the initial contract in compliance with the relevant deadlines and the proper form of expiration. Before you cancel, you should already have the follow-up financing fixed. This is the chance to create a customized, adapted follow-up financing concept. In this way, you also react to the current interest rate situation and to your financial possibilities, which may have changed during the term of the initial contract..
Since it often makes sense to repay part of the remaining debt immediately with existing equity and only refinance the remaining contract, a full consultation with our experts is recommended.
- How high should the unscheduled repayment be set??
- What residual debt can be expected after the unscheduled repayment?
- Need monthly installment adjustments?
- Should the repayment be increased as part of the follow-up financing?
An optimized follow-up financing concept is not available off the shelf. Taking into account your financial situation, you have to decide which option makes the most sense for you. Term, repayment, unscheduled repayment and the choice of the appropriate bank then play an important role. Of course, always consider whether a forward loan is even an option. Take advantage of the expertise of specialized construction financing advisors, who can help you both with the termination according to § 489 para. 1 No. 2 BGB (German Civil Code) as well as assist in the design of follow-up financing. With these experts, a construction loan rescheduling or the conclusion of a forward loan to your advantage is uncomplicated to manage.
The residual debt risk mainly affects first-time financiers. But there are ways and means you should know to keep this risk as low as possible.