Prolongations can be processed quickly and easily. Both the bank itself and you have very little effort to conclude a new agreement. This is always the most important argument for the financing bank. But rescheduling to another bank is far less problematic than expected …
An overview of the most important points
- Ask for an offer early and actively
- Financially, the additional work involved in rescheduling pays off in most cases; small interest rate differences are often underestimated
- The new property valuation also creates opportunities
Prolongations are a very popular business for house banks. They openly count on the “sluggishness” of their customers. We want to show you that a qualitative interest rate comparison by banks works quickly and easily. Your advantage is the chance to pay significantly less interest. Your “disadvantage” is the time you spend on the phone, possibly an hour. We would be happy to work out how much interest savings you will get from a new offer from another bank.
Get your offer actively from the house bank.
Your house bank is legally obliged to provide you with an offer for the prolongation (extension of the loan contract) shortly before the fixed interest rate expires. Do not wait until then, because then the time is running out. Instead, ask for an offer at least 12 months before the target interest rate expires. We can then compare this with other offers without the time pressure.
Debt rescheduling to another lender is less than expected.
The documentation requirements for follow-up financing at another bank vary. We have put them together in the linked article. The good thing about it: you don’t have to provide most of the documents until you know that the financial benefit is worthwhile for you. We will create a comparison offer for you first, then you can decide.
The financial advantage of an “apparently” small interest rate differential is often underestimated over the term.
Even small interest rate differences have a noticeable financial impact over the long term of mortgage lending.
A sample calculation of your follow-up financing
Sample calculation: residual debt loan 150,000 dollars, desired fixed interest rate 15 years, 2.5% pa repayment.
Interest rate existing bank: 2.05%, rate: 568.75 dollars
Interest rate new bank: 1.75%, rate: 531.25 dollars
Savings per month: 37.50 dollars
Savings over 15 years: approx.5,200 dollars
The new property valuation is also an opportunity.
In contrast to a prolongation, a new property valuation is carried out for a new lender. Especially in metropolitan areas, there are chances of an interest advantage after a fixed interest rate of 10-15 years, since the property value has increased over time and the ratio between loan (residual debt) and property value is smaller. This ratio, also called the loan-to-value ratio, is one of the most important factors influencing your interest rate.
In the case of a prolongation (extension of the loan from your previous lender), on the other hand, the existing loan contract is only extended with a new condition and fixed interest rates. Therefore, there is no renewed property evaluation or credit check.