Plan your follow-up financing in good time

There are essentially three options available to you for refinancing: extending the term with your current bank, switching to another bank, or locking in the interest rate early with a forward loan.

Renewal with your current bank

Your current bank will usually make you an offer to extend your mortgage a few weeks to months before the fixed-rate period expires. This so-called extension is usually straightforward, as the existing mortgage is simply continued.

However, your bank’s offer may not necessarily be the most favourable. It is therefore worth comparing different financing terms.

Transferring your mortgage to another bank

At the end of the fixed-rate period, you can transfer your mortgage to another bank without having to pay an early repayment penalty.

It is often possible to transfer the existing mortgage to the new bank. The associated notary and land registry fees are usually manageable. At the same time, this presents an opportunity to renegotiate your monthly repayment or to pay off part of the outstanding balance.

Forward loan

With a forward loan, you can secure the terms for your follow-up financing several years in advance. Depending on the bank, this is possible up to five years before the end of the existing fixed-rate period.

This planning certainty may incur an interest premium, the amount of which depends, amongst other things, on the lead time.

A forward loan protects you against rising interest rates. However, should interest rates fall in the meantime, you will not benefit from this development. This is because the agreed interest rate is binding and the loan must, in principle, be taken out.

When should I sort this out?

It is advisable to explore the options for follow-up financing at least twelve months before the fixed-rate period expires.

Anyone wishing to protect themselves against rising interest rates at an early stage can start looking into a forward loan as early as three to five years in advance.

You can find the exact details of your fixed-rate period in your loan agreement.

RIEDEL Finance compares the terms and conditions of over 400 banks on your behalf and helps you find the right follow-up financing. This applies even if you did not purchase your property through RIEDEL Immobilien.