In Germany, there is an increasing demand for real estate and thus also for construction financing. But what happens at the end of the agreed term of the construction loan?? Many borrowers are then faced with the question of how they can reschedule their outstanding debts at a favorable rate. This is where follow-up financing comes into play.
Follow-up financing is a way to refinance the remaining debt at the end of the agreed-upon term, bringing the terms in line with the current market situation. Learn how to make this debt restructuring favorable in this article.
Find out how you can save interest with a follow-up financing and what options you have in the process. We show you which factors are important when rescheduling and what you should look out for in order to find the best possible solution for your individual situation. Use our tips and advice to reschedule your construction financing at a favorable rate and thus save money in the long term.
With a follow-up financing you can put your construction financing on a new basis to benefit from more favorable interest rates and more flexible conditions. Find out now about the options for follow-up financing and lay the foundation for a financially successful future.
Follow-up financing – a favorable option for construction financing?
Follow-up financing is financing that is used to cover the remaining debt after the initial construction financing has expired. This is a popular option for homeowners looking to make their current financing more affordable.
Since follow-on financing often comes with a lower interest rate than the original loan, this option is a good way to reduce monthly payments. However, one should make sure that the new conditions of the follow-up financing are also favorable and tailored to your needs.
In addition, there are various options for follow-up financing, such as the prolongation or the rescheduling of debt. A rollover means that you stay with your current bank and only change the conditions. A debt rescheduling, on the other hand, means switching to another bank and thus getting better offers and conditions.
- Ultimately, it’s important to thoroughly research the different options for follow-on financing and carefully compare offers to find the best terms for your personal situation.
- Follow-up financing can be a good way to refinance construction loans more favorably and reduce the monthly burden. However, one should also take into account the associated risks and costs and seek advice.
Overall, follow-up financing can be a good option for refinancing current mortgages at more favorable conditions. However, you should thoroughly research the various options and risks and carefully compare offers to find the best option for your situation.
Why does follow-up financing make sense??
Follow-up financing can be a sensible option for many builders. Because when the fixed interest rate expires, the agreed monthly installment for the construction financing often ends as well. If there is not enough money available for full repayment at this point, follow-up financing is recommended. This involves making a new agreement with the bank to continue paying off the outstanding amount and to continue the installment payments.
However, follow-up financing is not only useful in financial bottlenecks. Even if the current interest rate level is lower than at the time of the original construction financing, a follow-up financing can be made at more attractive conditions and thus lead to savings. Follow-up financing therefore offers the possibility of lowering the monthly installments and thus relieving the burden on the budget.
However, it should be noted that follow-up financing can be associated with additional costs. A new credit check as well as fees for debt restructuring or an early repayment penalty may apply. It is therefore advisable to find out in advance exactly what the conditions and costs of follow-up financing are and, if necessary, to obtain offers from various banks.
Favorable follow-up financing for your construction financing
You have found your dream property and are the happy owner of a construction loan. But the fixed interest rate expires soon and you need follow-up financing? Then you should inform yourself well and compare different offers to find the best conditions for your follow-up financing.
An important factor for a favorable follow-up financing is the interest rate. The lower this turns out to be, the less interest you have to pay to the bank. But other factors such as the term and the amount of repayment also play a decisive role in the conditions of your follow-up financing.
In order to obtain the best conditions for your follow-up financing, you should obtain offers from various banks and compare them carefully. To do this, use online comparison calculators or seek advice from an independent financial advisor.
- Compare the interest rates and also take into account the conditions for unscheduled repayments or installment suspensions.
- Check the term and amount of repayment and adjust it to your financial situation.
- Check the general conditions such as.B. the residual debt at the end of the fixed interest rate or the amount of the early repayment penalty.
Take plenty of time to research and compare the various offerings. Favorable follow-up financing can save you a lot of money in the future and reduce your financial burden.
The advantages and disadvantages of follow-up financing at a glance!
Follow-on financing can be an attractive option for refinancing construction loans at a low cost. However, there are both advantages and disadvantages that should be weighed before making a decision.
Advantages of follow-on financing:
- Mostly lower interest rates compared to initial financing
- No new land charge or notary procedure necessary
- Flexibility in the choice of repayment and term
Disadvantages of follow-up financing:
- There may be additional costs, such as an early repayment penalty
- The offer of the house bank does not have to be the most favorable, so that a comparison with other banks is necessary
- Interest rates can fluctuate, making long-term planning difficult
Before making a decision, it is advisable to seek comprehensive advice from a financial expert and compare offers from different banks in order to find the best possible solution.
