Loans cost money. Although they bring a financial blessing at the time of conclusion, but then begins the painful repatriation. No wonder, if one or the other desires a premature retirement, especially if suddenly enough cash is available to realize this. Especially long-term loans Construction loans are a part of it can quickly become an expensive spa when interest rates tumble. Above all, older loans are among the costly moles today. So the question is:
Is there a way to prematurely terminate a loan?
Oh yes, they exist. You just have to be willing to pay the accrued relief (small joke). But without it is synonymous. The contractor who can give a reason for the termination, who does not provide any indemnification, will be released from the contract free of charge. In the following, we will examine what is possible.
1. We, the brave citizens, can not borrow money without us cutting our trousers financially in front of the bank. For some people, that may be a grudge, and they are distributing the sum of their needed loan across several institutions. Each institute only receives the information necessary for granting the loan, thus spoiling its insight into the overall economic situation.
In the age of mergers, however, it can happen that the participating institutions merge. This project would, however, be contrary to the original causes of the borrower. If the latter can now affirm that the merger is contrary to its intentions, it may claim a special right to terminate the contract without notice free of indemnity. However, this cancellation right is to be exercised in the short term, sometimes within 14 days.
2. Life insurance loans and home loan financing often include special right of cancellation in the allocation of the pre-funded home savings or life insurance policy. The funds thus freed up are always accompanied by special reasons for early repayments of ongoing bridging loans or life insurance loans. In order to ensure that no indemnity is payable in such a case, care must be taken to ensure that corresponding clauses apply when the contract is concluded that the loan is then repaid without compensation.
3. As a rule, no bank can demand compensation if it itself initiates the premature settlement. Credit institutions always have an interest in seeing the lent money flow back into their coffers. If you see this target at risk, you will quickly become nervous. Therefore, if a loan is considered to be in default of repayment for the future, the Bank’s activities are often in full swing. In order to save what can be saved, the bank calls the loan back without announcing it in advance. Usually a cancellation agreement is sent, which the bank would like to have signed by the customer. If the borrower now commissions another bank to terminate the loan without signing the dissolution agreement, he will not owe any indemnity. For that the bank can now attach no legal reason. This is true even if the original contract provides for an indemnity in its general terms and conditions in the event of bankruptcy, as no notice has been given.
Those who can not benefit from the examples given may be fond of opportunities that are not entirely free, but at least favorable. These include
1. Immediate debt restructuring
So just pick up a new cheap loan and get rid of the old one? That would be fantastic if it were not for the contractually agreed fixed interest rate. Without additional costs, a loan can only be terminated before the end of the fixed interest period if there is a particular reason for the loan repayment / cancellation. This can be, for example, the sale of the mortgaged property. Here, the bank can agree to the early repayment, but it can also reject the premature settlement. An exception are pure home savings loans.
If the bank proves to be unfavorable and a default payment is made, it is a matter of calculation whether a debt rescheduling is worthwhile. In doing so, the amount of the indemnity, the remaining maturity and the interest rate of the existing loan and future interest rates must be weighed against each other.
2. Repayment of existing loans with a remaining term of up to 12 months
Will your existing loan retire in the foreseeable future, perhaps within the next 12 months? Then it is advisable to think about a corresponding extension loan. Maybe the bank will join in and, for reasons of goodwill, get an early settlement if you want to finance the remaining amount with it? Maybe you would otherwise go to another bank in 12 months! But even if that does not funzt, there is still the possibility, only in 12 months to receive the follow-up loan. However, if the bank provides the follow-up loan at today’s (favorable) condition, care must be taken that no provisioning interest is incurred. In addition, the deal has a small drawback: Take a loan taken today with 10-year fixed interest, payable in 12 months, has only 9 years interest rate security. But maybe one can also make a longer interest rate fixation.
3. Forward loans
Is your fixed interest period up to 42 months? Then you should think about a so-called forward loan. This type of loan offers the benefits of today’s interest rates plus a small allowance to cover the costs of delivery. Otherwise, the forward loan is free of costs until the settlement date, and the subsequent settlement or rescheduling takes place as far as possible automatically. However, notary fees for the assignment of registered land charges to the new bank will be incurred. Rule of thumb: approx. 0.20 to 0.50% of the transfer amount.