When the borrowing rate of a mortgage ends, many real estate owners tend to immediately accept the offer of the previously financing bank. Many shy away from the “extra work” of switching banks. But a change is not so exhausting and very often brings financial benefits. The story is on onecer.net
What is debt restructuring compared to a prolongation?
In the event of a prolongation , you continue to finance with your previous lender. When rescheduling, use the cheaper offer from another bank. So you owe your remaining debt. Of course, you only do this if you save accordingly through debt rescheduling, ie the loan interest of the new bank is cheaper than the conditions of the old bank.
You can have this check carried out in advance, ie before you compile the necessary documents for a bank change. If it is now financially worthwhile and you can reduce your monthly rate somewhat, you can compile the documents. We are happy to assist you.
What documents do you need for debt restructuring?
Basically, of course, this differs somewhat from bank to bank. But roughly similar evidence is required:
- current land register extract of the financing object
- Property documents (floor space calculations, floor plans, proof of modernization measures, etc.)
- Documents on the personal income situation (income tax notice, 3 current pay slips, for self-employed: business evaluations)
- previous loan contract and a loan account statement (you receive this from the bank once a year)
So it’s best to get a comprehensive market overview and compare different banks with each other. We are happy to support you in this, because that is exactly what we do very well. Taking into account the costs associated with the rescheduling of the transfer of the collateral, a cheaper offer can then be compared exactly.
Example of interest savings when rescheduling to a new lender
Debt rescheduling of residual debt of USD 190,000, 10 years’ fixed interest rate, 3% annual repayment
Borrowing rate of previous bank: 1.84%, monthly rate: 766 dollars
Borrowing rate new bank: 1.49%, rate: 711 dollars
monthly savings: 55.00 dollars
Computational savings in 10 years (without special repayment): approx.5,546 dollars
From this you have to deduct the costs for the assignment of the land charge (notary and land register costs) to the new bank. This fee is based on the amount of the land charge entered in the land register.
Example of assignment costs :
registered land charge = 250,000 dollars
- if the notary carries out the assignment: approx. 590 dollars (plus expenses)
- if the bank executes the assignment: approx. 360 dollars (plus expenses)
Conclusion: Is it worth the effort to complete another bank?
If you are not afraid of the small effort of obtaining documents (mind you, after the banks have been compared), you can save a lot. Ultimately, the interest of the new lender must be so low when rescheduling that effort and additional costs are more than covered.
The following applies: The higher the remaining loan, the more it is worth rescheduling even with only small percentage differences, since the interest savings in dollars are then very high. We are happy to assist you with this question.