Financing the remaining debt with favorable interest rates: follow-up financing
The purchase of a property or apartment represents a large investment. In most cases, you have to take out a loan to finance the purchase price. During the term of the loan, financial possibilities and life circumstances may change and thus also the framework conditions of the loan agreement. Often there is then a follow-up financing, in which the remaining debt is paid off with a new loan.
This financing option is very popular, as it offers the possibility of benefiting from lower interest rates. With the follow-up financing, one can refinance the remaining debt at the current conditions of the financial market. This can lead to a significant interest rate advantage and thus a considerable saving on interest costs.
However, the change of financing provider is associated with certain costs, such as early repayment penalties or processing fees. It is therefore worthwhile to find out in advance in detail whether and to what extent a change is worthwhile and what costs have to be taken into account in the process.
Ultimately, it is important to deal with the topic of follow-up financing at an early stage and to carefully examine the various offers and conditions in order to find the best possible solution and thus to benefit from favorable interest rates in the long term.
Find out here about the various options for follow-up financing and secure favorable interest rates for yourself.
What is follow-up financing?
Follow-up financing is a way to continue financing the remaining debt of a loan after the fixed-interest period has expired. This involves a new agreement between the borrower and the bank, which is usually associated with more favorable interest rates.
Follow-up financing is an important option for many borrowers, as they are usually unable to repay the balance of the loan all at once. By signing a new contract, the borrower can extend the loan repayment period and reduce monthly payments.
It is important to note that the bank conducts a new credit check during follow-up financing to ensure that the borrower is still able to make the monthly payments. If the borrower’s credit rating has deteriorated in the meantime, it may be difficult to obtain follow-up financing, or the terms may worsen.
- Advantages of follow-up financing:
- More favorable interest rates than with a newly concluded loan
- Extension of the repayment period
- Reduction of monthly payments
In general, follow-up financing is a viable option for borrowers who have a remaining debt and want to reduce monthly payments. However, it is important to carefully review the terms of the contract and check creditworthiness to ensure that follow-up financing is a viable option.
How does a follow-up financing work?
Follow-up financing is a relatively simple way to finance a residual debt. This is follow-up financing that is used to repay the remaining debt after a loan has expired. Follow-up financing can usually be arranged at a more favorable interest rate than the original loan.
There are several possible options for follow-up financing. One option, for example, is a rollover. This simply extends the existing loan and continues to repay the remaining debt at the agreed terms and conditions. Another option is to reschedule the debt. This involves financing the remaining debt with another credit institution. In this case, it may be possible to agree on an even more favorable interest rate.
To use a follow-up financing, the remaining debt of the existing loan must be known. This can either be communicated by the credit institution or can be easily calculated yourself. A suitable offer for follow-up financing can then be obtained.
- Follow-up financing is a good way to finance a residual debt.
- Different variants of the follow-up financing are conceivable, for example the prolongation or the debt rescheduling.
- To use a follow-on financing, the remaining debt of the existing loan must be known and a suitable offer must be selected.
Why follow-up financing is a sensible option
When a loan is taken out for a home or property, rarely is the entire loan repaid during the term of the loan. Instead, there is often a residual debt that must be repaid in a limited amount of time. A follow-on financing is an option to finance this remaining debt.
With favorable interest rates, it is often easier to take out follow-up financing than a larger loan amount. It can also help to obtain a more favorable interest rate than the original loan agreement, which lowers the monthly installment payments. Follow-up financing is also an opportunity to change the terms of the loan agreement, such as e.g. the term of the loan.
In addition, a follow-up financing can offer you more flexibility. If you are unable to pay off the remaining debt in full and need to take out follow-up financing, you can have more time to organize your finances. This can also be an opportunity to review your existing credits and loans and possibly arrive at a better financial strategy.
In general, it is worth considering follow-up financing as an option to finance residual debt. It can be a way to reduce interest rates, change the terms of the loan and get more flexibility in repaying the remaining debt.
Tips for finding low-cost follow-on financing
Follow-up financing is an important step in financing a property. After expiration of the fixed interest rate, a new financing must be found to repay the remaining debt. It is important to find a favorable follow-up financing in order to save costs in the long run.
An important tip when looking for a favorable follow-up financing is to compare different offers. You can either compare the offers of different banks yourself or hire an independent financial advisor. It is important to pay attention not only to the interest rate, but also to the conditions such as the term and the possibility of unscheduled repayment.
In addition, you should also pay attention to your credit rating, as this has a direct impact on the interest rate. A good credit rating can get you a lower interest rate and thus save you money in the long run. It is therefore worth checking your credit rating before looking for follow-up financing and improving it if necessary.
- Favorable follow-up financing can save costs in the long term.
- Compare different offers and pay attention to the conditions.
- Consult an independent financial advisor to find the best offer.
- Pay attention to your credit score and improve it before searching, if necessary.