Loan: Cheap Interest
What is a loan?
The loan is aimed at borrowers who have been financing their property for some time and whose first interest rate commitment will soon expire. The loan is therefore a follow-up financing consisting of a standard annuity loan with fixed monthly installments and a fixed interest rate, which you can freely choose. The special feature of this follow-up loan: You can already complete it up to five and a half years in advance. Therefore, by the way, the name: Literally, Forward means loans in about “advance loan”.
But why does it make sense to conclude follow-up financing now, which you will only need in several years? The answer is simple:
The loan secures today’s low interest rates for you, so that your follow-up financing is favorable.
In other words, when your first debit interest matures, there is usually a residual debt left over that needs to be refinanced. You could just wait until your first mortgage lending has expired and just before closing a new financing for your remaining debt. The level of interest rates is currently low, but it is quite possible that the interest rates will rise again until the end of your first financing. Without a loan you need to finance your follow-up financing at this higher interest rate. With a loan, you can now purchase your follow-up financing at a low interest rate and be fine if interest rates rise in the meantime.
This is how the loan works
- The loan is a normal annuity loan (characteristics: fixed interest rate over several years, always constant monthly rate).
- Up to 5.5 years before the end of your current financing, you can take out a loan.
- The payment of the loan is made on time, after the interest lock on your first loan expires and the remaining debt has to be further financed.
- With the money from the loan, you repay this old debt in due time.
- Now, the loan starts with its own fixed interest rate, and you then pay off the new remaining debt every month.
Advantages of loan
- You can secure today’s low interest rates on financing that you will need in the future.
- Rising interest rates can not hurt you anymore.
- The loan also gives you the option of choosing long-term fixed interest rates.
Disadvantages of the loan
- If you have a loan, you will need to reduce it in the future; even if interest rates have dropped in the meantime.
- The longer in advance you complete the loan, the higher the borrowing rate.