Building saving loans that are far too expensive, last-minute offers for follow-up financing – that doesn’t have to be. Whoever knows what leeway the banks have with their offers and uses them skilfully can save thousands of euros.
Boris M. actually had little desire to make use of the bauspar loan, which he had saved up for seven years. At that time, 3.75 percent still sounded tempting – now there are building loans for less than half. So M. informed his building society that he would accept the loan for the time being. But he intended to replace it very soon, as soon as he had found another offer. A premature redemption is possible at any time free of charge with building saving loans.
To his surprise, the bausparkasse accepted – and shortly afterwards made an unbeatable offer: Would he be interested in a loan for 1.0 percent? True to the motto: Better to keep the customer at lower conditions than to earn nothing with him at all.
The example shows what leeway the banks still have despite the whining about low interest rates – and what opportunities customers have if they persist.
Because they urgently need to invest their overnight and fixed-term deposits and because loans still promise the highest margins, banks and building societies are in some cases very accommodating to their customers when it comes to home financing.
Speculating on the naivety of customers
But only if they’re forced to. In the first attempt, many institutions unfortunately often rely on the naivety of their customers: when renegotiating a building loan, for example, they leave the interest rate at a high level as long as the customer doesn’t get stuck. Or the bank sends a mortgage customer whose loan expires the offer for follow-up financing only at the last minute so that the customer does not look out for competing offers – startled by too early a reminder.
Consumers should not be misled by this: Those who cleverly negotiate their credit, home savings loan or follow-up financing save a lot of money. “How high the savings are, cannot be generalized , says the consumer center Hamburg.
Thousands of euros can be saved through clever negotiations, as a sample calculation by the credit broker Interhyp shows:
A homeowner buys a property worth 200,000 euros. Because he has equity capital of EUR 50,000, he asks his bank for a loan of EUR 150,000. In return, he receives an offer at an effective interest rate of 1.79 percent per year. Monthly a rate of 500 euro becomes due.
The fixed interest period ends after ten years. The remaining debt thus amounts to 113,727 euros in July 2026. Three months before the end of the term – i.e. in May 2026 – the borrower receives an offer for follow-up financing from his bank. The interest rate on the loan is now 1.95 percent. Why has the loan become more expensive? The bank justifies the higher interest rate with the expectation that the ECB could raise interest rates during the fixed-interest period. The explosive thing is that a competing bank offers the loan at an interest rate of 1.85 percent per annum.
The customer should consider this carefully: At the old bank, the remaining debt in July 2036 after the end of the fixed-interest period amounts to 72,001.38 euros. The other bank, on the other hand, has 1,035.49 euros less. The borrower owes “only” 70,965.89 euros there in July 2036.
As a general rule, you should not wait alone for the offer from your house bank, especially when it comes to follow-up financing. Start in time with the search for a favorable offerer. It’s definitely worth it – even if it’s to trade down your house bank.
This is what you should know about follow-up financing
In construction financing, the banks commit themselves to a fixed interest rate over a fixed term. The advantage for the customer: During this period he always pays the same, fixed monthly instalment. The longer the loan runs, the higher the repayment portion in the instalment, the lower the interest portion.
Normally, no one succeeds in paying off their property completely within the agreed ten or 15 years. If the fixed-interest period expires, the homeowner needs a new loan – at the then valid conditions. “Usually bank customers with a running time of at least 35 years must three times for follow-up financing , say the consumer center Hamburg.
At the latest two to three months before the interest commitment period ends, banks and building societies announce themselves to the customers concerned and submit their offers for the follow-up financing. But consumers should not rely on it. “The institutions do not always present the best offer,” says a consumer protector. Often there are cheaper offers from the competition. And also the own bank has usually still air in the conditions.
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