Construction financing debt restructuring: save money now.

Own house - expensive old financing? now you can change that with a construction financing debt restructuring

..Anyone who took out a construction loan 10 years ago will certainly ask themselves today, in times of absolute mini interest rates, how they can enjoy the current favorable interest rate. The good news: A construction financing debt restructuring is possible in many cases. Nevertheless, it is not done with a construction financing debt restructuring alone. One should still illuminate some aspects in the case of the possibility, in order to optimally design the future follow-up financing.

Construction financing debt restructuring is regulated by law

All consumers have, according to § 489 para. 1 No. 2 BGB the right to cancel an initial or. old contract after 10 years. Not only complete but also partial terminations are possible. Partial terminations make sense if you can make a high unscheduled repayment through a one-time payment and the old contract was also concluded at interest rates that correspond to today's interest rate. In addition, the repayment is already fixed at a minimum of 3 percent (if your repayment agreement is only 1 or 2 percent, then a complete cancellation is advisable to then fix the repayment at 5 percent or morenew). In this case, the contract continues to run at the original terms (interest, repayment, term), but the remaining debt is reduced by a one-time payment. Because it always applies: the faster the building loan is completely repaid, the more favorable the complete financing is.

Often a complete cancellation of the contract is to be aimed at, in order to conclude the remaining debt with another bank at more favorable interest rates. Depending on the remaining term of your initial contract, the agreed interest rate, the unscheduled repayment options as well as future rising interest rates, a cancellation must be carefully weighed up. Here bank-independent construction financing mediators help you. Advice on debt restructuring is always free of charge at accedo AG.

Construction financing debt restructuring: the so-called "full receipt" must be considered

With this cancellation, however, it should be noted that the timing of the cancellation depends on the so-called "full receipt", the disbursement of the last amount of the loan (which is often made in several installments). Normally, the borrower receives a letter from the bank informing him of this full disbursement. This date is binding, as a cancellation must be made 10 years later with a 6 month notice period. Of course you can cancel 7 months in advance.

Rescheduling with a forward loan

If you took out your initial contract during 2013 to 2016, now is also a good time to think about rescheduling your debt. You agree with your construction financing advisor on a concept to secure the current favorable interest rates already for the time after the cancellation or expiration of the old contract for the follow-up financing.

Typically, the slightly higher interest surcharges that apply to a forward loan depending on the lead time make perfect sense (the difference between signing a forward loan 12 months or 24 months before expiration typically accounts for 0.2 percent more interest per forward year). Since it is now assumed that the historically low mini interest phase is now over, one should become active now, obtain information on forward loans and look for forward financing options.

Seek consultation with a non-bank construction financing advisor who can explain the timing and procedure for your best follow-on financing plan. With daily access to the conditions and contract terms of over 400 banks (as is customary with ACCEDO), you can quickly decide whether the early conclusion of a forward loan makes sense in your case. Ultimately, a forward loan is a calculator or. Also a bet on future rising interest rates. Material to your decision is the remaining term of your initial contract and the current status of remaining debt. You can find the amount of the remaining debt in the repayment schedule that the bank providing the initial financing hands out when you sign the contract for the initial financing. In the current interest rate situation, it makes perfect sense to reduce the remaining debt with a one-time payment (unscheduled repayment) at the end of the initial contract. The lower remaining debt also makes forward financing more favorable.

Construction financing debt restructuring: get advice independent of banks

The complete termination of the old contract is the most common variant of debt restructuring. However, since it is usually not in the interest of the lending bank to cancel a construction loan with a 10-year or even longer term, it is also essential to find another financing partner, such as a. B. bank-independent credit intermediaries resp. Direct financiers, inquire and get a non-binding and free offer for follow-up financing. So z. B. ACCEDO AG specializes in consulting and implementation of a refinancing incl. Complete termination of the initial contract, observing the appropriate deadlines and the correct form of procedure. Before giving notice, you should already have fixed the follow-up financing. This is your chance to create a customized, customized follow-on financing plan. In this way, you can also react to the current interest rate situation and to your financial possibilities, which may have changed during the term of the initial contract..

Since it often makes sense to repay part of the remaining debt immediately with existing equity and only refinance the remaining contract, it is advisable to obtain comprehensive advice from our experts.

  • How high should the unscheduled repayment be set at?
  • What residual debt can be expected after unscheduled repayment??
  • Do you need monthly rate adjustments?
  • Should the repayment be increased as part of the follow-up financing?

An optimized follow-up financing concept is not available off the shelf. Taking into account your financial situation, decide which option makes the most sense for you. Term, repayment, unscheduled repayment and the choice of a suitable bank then play an important role. Of course, it's always important to consider whether a forward loan is an option at all. For this purpose, use the expertise of construction financing advisors who specialize in this area and who can help you both with the termination of the contract in accordance with § 489 para. 1 No. 2 BGB as well as assist in the conception of the follow-up financing. With these experts, a construction financing debt restructuring or the conclusion of a forward loan to your advantage is uncomplicated to manage.

The residual debt risk mainly affects first-time financiers. However, there are ways and means that you should know in order to keep this risk as low as possible.