Forward Loans: cancel mortgage faster

Interest Rates

Interest rates are now low. But what if I need the money in two years? Then a forward loan helps. A court makes such loans now more attractive.

The word is not part of the standard vocabulary of high school graduates – and yet it has become fashionable: forward loans. Because these loans are the answer to a problem that many homeowners owners: The interest rates are now low, but the mortgage does not expire until two years ago. What if interest rates are higher by then?

Those who shy away from this risk may enter into a forward loan. The idea: The customer concludes with the bank already a loan agreement for the money he needs in two years. Is the interest rate increased, he gets still lower interest rates today? If the interest but fallen, the bank benefits.

What interests can you get today? That tells you our forward loan comparison.

But the bank benefits from it will no longer be so much – that concludes a law firm involved with a judgment from the national court (judgment of 09/14/2015, file number I-1 O 68/15). At least this is true for cases in which concluded the forward loans in the previous bench and in this way to an extension of the old loan.

Borrowers have a right of termination

The background is a right of termination, the borrower will always have: After ten years, they may terminate their loan agreement, even if they have agreed to a longer fixed interest rates. Thus, banks expect already. But when they start ten years? Banks like to say these ten years would begin with the payment of the loan. That’s true often. If the forward loans, however, is the extension of an existing loan, reaches for the court, another part of the legal text (paragraph 489 BGB). Then ten years beginning with the date of the credit contract extension.

The forward loans Comparison

For borrowers, it results in two phrases:

Anyone who has an existing forward loan and thus has extended a loan agreement with the old bank – which can send a notice ten years after signing the contract to his bank already. That might be worth considering the low-interest rates for many borrowers. Caution: The legal notice period is six months until the contract is actually resolved, then ten years and six months have passed.

However, who just want to finish a forward loan, which should give his old creditor bank a certain preference. If the conditions are similar, he should arrange the loan there as an extension of the old loan. In this way, the borrower may terminate the forward loan at his old bank faster than a new one.

Correction: The Künfigungsfrist is six months after the ten years have passed, and not six months after nine years and six months have elapsed. We thank our readers Olaf Wilken for the hint!