Debting a real estate loan works like this: First of all, it is important to find out when the current fixed interest rate ends, because this is the date on which you can debit. The written notice of termination must go to the bank no later than three months before expiry. At the same time, you inform the new bank of the exact change date and conclude a new contract. At this date, the old real estate loan is automatically replaced by the sum of the new real estate loan.
Use favorable interest rates for debt restructuring
Many wonder: “Debt real estate loan – how does it work?” and “Can I get out of there so easily?” Because most property owners know that once tied to construction finance, it is not so easy to get out of the contract. But interest rates are cheap right now, debt restructuring is tempting. But the question is at what point in time you want to reschedule.
Real estate loan rescheduling towards the end of the fixed interest period
Would you like to reschedule your real estate loan at the end of today’s fixed interest rate? Follow these steps:
- Take a look at your financing documents and find out when your current borrowing rate expires. At this moment you will definitely get out of the current loan and can easily reschedule.
- Start dealing with follow-up financing at the latest one and a half to two years before the expiry of this borrowing rate. At this point, ask your house bank which offers they would make for a prolongation (the extension of your previous mortgage loan). If you don’t like the offer, ask other banks about better interest rates and consider rescheduling.
- Has the decision been made to reschedule? Then notify your bank at least three months before the end of the fixed interest period that you do not want to extend and switch to another bank.
- Accept the offer of the new bank and tell it the exact change date. On this day, the remaining debt of the old loan is automatically replaced by the sum of the new mortgage. The new bank also initiates all the usual formalities and takes care of the notary appointment that is necessary for the new land register entry.
Real estate loan rescheduling before the fixed interest rate expires
Would you like to switch to a new bank before the end of your fixed interest rate today? Then the situation is a little different. In this case, first check your financing documents to see how long your fixed interest rate has been running.
- Less than ten years:
Then your chances are bad, you cannot reschedule the real estate loan. The bank is under no obligation to let you out of the contract early unless you want to sell your home. Then she has to let you go, but may demand prepayment penalty.
- For more than ten years:
As soon as your fixed interest rate has exceeded the 10-year limit, you can now terminate daily with six months’ notice, free of charge. This regulates §489 BGB.