Life is full of surprises. For example, the need for living space can change completely over time. If you are then looking for a new property, you need a favorable loan and, in today's world, often a good real estate agent. If you have already found your dream property, you can consider yourself lucky. When the home loan expires, borrowers have to decide what to do next with their real estate financing. In most cases, there is still residual debt on the current loan at the end of the fixed-interest period. This means that they can either be repaid in one fell swoop or follow-up financing must be arranged. Borrowers can currently save a lot of money by rescheduling their real estate loans.
Using real estate agents and banking experts as advisors
Regardless of whether a new property is to be financed or a debt restructuring is on the agenda, a favorable loan can help to save a lot of money in the long term. But before financing, the path to the property leads in most cases first to a real estate broker. The expert should help to find the ideal plot of land, the dream house or the right apartment. With a professional overview of the current market situation, the real estate agent is often instrumental in bringing the right property into the client's possession in the near future. However, before a purchase contract can be signed, other experts come into play, such as the advisors of the credit institutions or credit brokers. Whether online or on site, they help you find the most favorable real estate loan for your individual needs. Even when rescheduling a real estate loan or combining several loans into one, the financial experts can help to adapt the new loan to the current needs of the borrower.
Possible cases when rescheduling the loan
As the saying goes: many roads lead to rome. In a figurative sense, this also applies to the financing of a real estate loan as well as the rescheduling of such a loan. On the one hand, every borrower has different requirements. On the other hand, there are a large number of financing offers from different providers. In turn, the loans can be adjusted in various ways, as shown by the following examples.
Case 1: the dream property has been found and now follow-up financing is required.
This is necessary when the concluded building loan expires. In most cases, there is still residual debt for this loan at the end of the fixed-interest period, since the repayment for the financing usually runs longer than the fixed-interest period for the real estate loan. As a rule, fixed interest rates are fixed for five, ten or 15 years. After this period, borrowers receive an offer from the financing bank for a new interest rate agreement well in advance of the expiry of the interest rate agreement. Now the customer has two options if he cannot pay off the remaining debt in one fell swoop with his own capital.
- A prolongation: this means that the loan is extended with the same bank with a new interest rate agreement. The customer accepts the offer for further property financing from the previous lender. This approach is extremely practical and simple for the customer. There are no additional costs due to an assignment of existing land debts or mortgages to the new banking partner. However, the offers of the house bank are not always the cheapest.
- A debt restructuring: if the customer decides to take out follow-on financing with a new lender, it is called a debt restructuring. In this case, the newly elected bank replaces the expiring loan and receives as collateral for the loan the real estate debt already registered in the land register. Here, borrowers have the opportunity to search for and secure the best interest rate. At this point, even small percentage points can result in enormous interest savings. This in turn can affect the repayment rate as well as the term of the loan. However, in the case of debt restructuring, notary and land registry fees are incurred for the assignment of the basic debt, which should definitely be taken into account.
Case 2: a new property is found. Is the rescheduling of the old loan possible?
A new family is on the way or the children are moving out – it can happen that the property already financed no longer suits the current living conditions. In such a case, a real estate agent can provide a remedy in the first step. With a good overview of the current real estate market, it provides advice and assistance in house hunting. Once the right property has been found, it has to be financed. But what happens to the previous construction financing?
One option is a lien swap – another name for the procedure of rolling over the existing loan to the new property. What is meant is that an existing security is exchanged for a new one. In the case of real estate financing, this means replacing one basic debt with another. The current loan agreement usually remains in place with all its features, only the collateral changes from the old property, the object of sale, to the new property, the object of purchase.
Here, it should be noted: a pledge exchange is possible if the new property results in at least the same value as the old property from the bank's point of view. From a commercial point of view, banks are often not very interested in exchanging collateral, so they usually charge a fee for processing it. Or they don't offer this option at all, but instead settle the old loan for an early repayment penalty and offer a new loan. This should always be requested in advance from the financing bank.
The biggest advantage of a mortgage swap is that the borrower does not have to pay an early repayment penalty due to a loan termination and can thus save money.
Conclusion: advice from real estate agents and financial experts is worthwhile
In the end, each borrower must decide for himself how to proceed. Nevertheless, it is always advisable to keep all options open and to have all possible ways calculated. So in the end, you can both profit through the real estate agent with the individually suitable solution and save cash with a loan restructuring.