Securing interest with forward loans

 

The fixed interest period runs for a few more years, but the current interest rates are very cheap and lower than the current loan interest rate. Secure the interest with a forward loan, this is possible even before the fixed interest period expires. Many banks offer such forward loans up to 5 years before the fixed interest period expires.

Secure interest with forward loans

Secure interest with forward loans

You can save a lot of money with the forward loan.

Forward loan: how it works

  • You are already applying for the loan for follow-up financing (forward loan)
  • In this way, you secure the current interest rate for follow-up financing
  • The forward loan is paid out when the fixed interest period expires. As a rule, the existing loan is repaid
  • The new fixed interest rate begins from the time the forward loan is paid out. Only then does the monthly payment in installments begin

Advantages of the forward loan

  • You secure the current interest rate level, the risk of rising interest rates will be eliminated in the future
  • There is no prepayment penalty for early loan repayment
  • You get planning security for the future, because the rate and the future interest rate are already fixed today

What is important?

What is important?

The following peculiarity applies when setting the interest rate for the forward loan.

  • In addition to the current interest rate, a small interest premium is taken into account for each month
  • The interest rate is therefore slightly above the current interest rate. The shorter the time until the loan is paid out, the lower the interest premium
  • If interest rates fall later, they have to accept the forward loan.
  • The forward loan is very advantageous in periods of low interest rates

Application process for the forward loan

Application process for the forward loan

In order to secure the interest with a forward loan, the application for the forward loan is made to a bank. If it is replaced by a third-party bank, cheaper interest offers may be the case.

Independent credit brokers in particular can offer the cheapest offer from a variety of banks.

The process is as follows:

  • Applying for a forward loan
  • Credit check by the bank
  • Agreement on future interest and monthly installments
  • Definition of the new fixed interest period
  • Payment of the forward loan upon expiry of the fixed interest rate on the existing loan.

Securing interest with a forward loan is the advantage of a forward loan. You can save interest and have planning security.

Leave a Reply

Your email address will not be published. Required fields are marked *