Rescheduling Advantages & Purpose of Installment Loan
Debt rescheduling is very popular at times of low interest rates. The question is, of course, when should you debt restructuring and makes sense at all? Basically, however, a rescheduling must always be expected with a sharp pen. This applies equally if you want to repay a installment loan, as well as for mortgage lending. The purpose of debt rescheduling is clear: a loan with higher interest rates should be replaced by a loan with lower interest rates. At first glance, that sounds little dramatic, but it may be costly. videoin.org for an assessment
Debt rescheduling of a installment loan
You took out a installment loan some years ago and now annoys you that interest rates are significantly lower today, you could actually save half of the interest. Now, numerous banks offer a free special repayment of up to 50 percent of the remaining debt once a year. However, that does not really help you if you do not have those resources. Moreover, the remainder of the loan still remains with the expensive interest rates. In this case, rescheduling makes perfect sense if: the interest savings for the new loan are higher than the prepayment penalty for the loan to be repaid.
This amounts to one percent if there is still a loan term of more than twelve months. If she is below her, you have to expect 0.5 percent prepayment penalty. With a remaining debt of 10,000 USD, the option to be able to replace 50 percent of the remaining debt free of charge and a remaining term of 20 months, therefore, come to the cost of 50 USD on you. In addition to the interest savings, of course, the desire for more clarity play a role. It is not uncommon for consumers to use more than one loan. Bundling brings you more transparency in the budget.
Rescheduling of mortgage lending
While the rescheduling of a installment loan turns out to be quite unspectacular, it becomes much more complex with mortgage lending. First of all, the prepayment penalty is not calculated as transparently as a installment loan. In 2013, the consumer center Hamburg was able to enforce a remedy in favor of the borrowers in 60 percent of the verified calculations. If the term of your loan is more than ten years, you can terminate the contract at the end of the tenth year without being charged a prepayment penalty. If you are planning to premature rescheduling your financing, the following steps should be taken into account. First of all, you ask your bank for the lending status at the planned date of the debt restructuring.
Do not forget to let you know the sum of the interest from this deadline to the end of the originally planned term. In the credit comparison, the interest rates of the new financing for the remaining term of the original fixed interest rate must be lower than the sum of the interest for the remaining term together with the prepayment penalty. When rescheduling a mortgage, there is another cost factor. Theoretically, the land charge would have to be deleted to the old bank in favor of the new bank and then re-ordered. Thus, the fees for the district court are connected. Cheaper in this case is the notarial assignment. In this case, the previous bank renounces the previous claims in the context of a declaration of assignment to be certified by a notary in favor of the new institute.