You can redeem your lender bank loan after the end of the fixed interest period specified in the contract. Depending on the lender bank program, this is between 5 and 20 years. In most cases, early repayment of the loan is only permitted against payment of a compensation sum during the fixed interest period. However, if your loan runs for more than ten years, you have an extraordinary right of termination after this time in accordance with § 489 BGB. That means you can redeem your loan after ten years with six months’ notice.
Some lender bank programs such as program 134 can also be redeemed free of charge during the fixed interest period. You can choose between a complete repayment and a special repayment in partial amounts from 1,000 USD. This regulation also applies to many old contracts that were concluded before April 16, 2018. With most lender bank loans that were received by lender bank after this date, however, early repayment is only possible against payment of a prepayment penalty. You can find out how high this is with our prepayment calculator.
Follow-up financing for lender bank loans
As a rule, lender bank offers you the option of choosing between a final loan and an annuity loan. In the case of a final loan, only the interest accrues during the term. If you opt for the annuity loan, you pay regular and constant installments during the term.
If the loan has not yet been repaid at the end of the first fixed interest period, follow-up financing for your lender bank loan is due. Shortly before the fixed interest period expires, you will receive an offer from lender bank-Bank. You now have three options. Either you accept the offer and continue your financing at lender bank on new terms: the interest rate and fixed interest rate will then be re-agreed at the market interest rates. The disadvantage: not only do you have to forego the previous funding conditions, but you may also pay a higher interest rate than you might have received from another bank.
Alternatively, it is advisable to conclude follow-up financing with the bank, from which you also received your building loan. To do this, you must obtain an offer from your house bank before the interest rate fixation on the lender bank loan ends. Some banks also allow the existing mortgage loan to be increased with the remaining debt. However, a good credit rating is a prerequisite for this. It is best to speak to your bank as to whether an increase is also possible in your case.
If the offer from your house bank is too expensive for you, you can opt for debt rescheduling. You take out a new, cheaper loan from another bank for the remaining debt. Debt rescheduling is particularly advantageous if you combine your mortgage lending and your lender bank loan into a new loan. The prerequisite for this is that both your construction loan and your lender bank loan expire at the same time.
Special case low residual debt
If your remaining debt is less than USD 50,000, banks generally reject a new building loan. You then only have the option of taking out an installment loan to finance the remaining debt. However, this has the disadvantage that the interest is significantly higher than for construction loans. A variant, as mentioned above, would be to top up the building loan with the remaining debt amount – if your bank allows it. A second option is useful if you are planning to modernize your property. In this case, you can take out a modernization loan. Here, the interest is higher than with a mortgage, but lower than with an installment loan. You also benefit from shorter terms and can therefore pay off your loan more quickly.