Table of contents
- Definition: follow-up financing
- Building savings contract as follow-up financing
- Advantages
- Disadvantages
- frequently asked Questions
If the original building financing has come to an end, but there is still a remaining debt, the question arises about follow-up financing. This should be planned early in order to choose the best option. Follow-up financing through the building savings contract is one of the options.
Definition: follow-up financing
The dream of owning your own home: Follow-up financing becomes necessary when the first building financing and fixed interest rate expires, but the debts have not yet been completely paid off. In order to pay the difference, continued financing must be chosen. There are four options for this:
- Building savings contract
- Forward loan
- Rollover
- Debt restructuring
During an extension, the existing loan with the bank is extended. Since the fixed interest rate has expired, the amount of the installments may change. The effort is the lowest here.
To refinance your debt, you take out a loan from another bank. This step requires more preparation, but may be worth it given better offers.
A forward loan is taken out several years before the end of the first loan. It can be taken out with your own bank or a new bank and offers a high level of security.
Tip:
It makes sense to consult with various banks and providers or with an independent financial advisor in order to choose the most sensible option in your individual case.
Building savings contract as follow-up financing
A rarely mentioned option for follow-up financing is: Building savings contract. Building savings contracts consist of the savings phase and the loan phase. During the first phase, savings amounts are deposited regularly. This continues until the so-called allocation readiness is reached. At this point, the building society can issue a low-interest loan that can be used to repay existing remaining debts.
Advantages
Follow-up financing via the building savings contract is particularly recommended when interest rates rise, as Have the contract maintain low interest rates seven to eight years before the upcoming follow-up financing. When the loan phase begins, the interest rates set at the time the contract was concluded apply. There are also other advantages such as:
- Payout of savings
- high flexibility
- high level of security
- no obligation to purchase
- Long-term planning possible
- additional security
With the building savings contract, you have the freedom not to accept the loan. If the interest rates have fallen in the meantime and it now makes more sense to choose another form of follow-up financing, the savings will be paid out and are therefore available. Financial flexibility is maintained.
Compared to forward loans, low interest rates can be maintained for even longer. The building savings contract can be concluded seven to eight years before follow-up financing begins. For the forward loan it is 66 months or 5.5 years. However, it is not easy because a forward loan can only be rejected subsequently in isolated cases. If the interest rates have fallen and you want to save through other follow-up financing, this is usually not possible.
Calculate follow-up financing
Tip:
If you know the value of your property, you can do so with a Calculate follow-up financing calculator conveniently online.
Disadvantages
The most significant disadvantage of a building savings contract as follow-up financing is the duration and timing. Since the savings phase lasts seven to eight years, the contract must be concluded on time. At this point, the forecast of interest rate developments determines whether building savings are profitable.
Also note whether the building savings contract is ready for allocation. This only happens when you
- the minimum savings balance
- the minimum saving time
achieved.
In addition, the building savings statement from the contract is not necessarily available on time. The building societies can only activate a certain number of loans during each allocation period. There is therefore a risk that you will have to wait several months for payments to begin. Interim financing is required for this period. This in turn means more effort, more fees and an overall higher burden.
Tip:
Despite the disadvantages, a building savings contract makes sense as security for follow-up financing. Even if you don't take the money as a loan, it is available as an option or will be paid out. If interest rates have risen, the building savings contract can significantly reduce the rates.
frequently asked Questions
For follow-up financing via a building savings contract, the loan should be concluded no later than eight years before the end of the loan. A forward loan can be taken out 66 months before the end of the loan. Debt restructuring and extension can be used shortly before the necessary change. The earlier the follow-up financing is planned, the better the chances of lower rates when interest rates tend to rise.
The interest rates for follow-up financing are currently between 3.5 and 4.0 percent, depending on the provider and term. Compared to interest rates ten years ago, there has been an increase. It is assumed that the trend will remain upwards in the next few years.
Yes, follow-up financing can be rejected if there are negative SCHUFA entries, the monthly burden is too high or your creditworthiness is limited.
Mirko
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