It is rare for homebuyers to repay their loans fully within the first fixed-interest period. In most cases, at least one debt restructuring is required, ie the remaining amount of debt will be refinanced. This almost always happens with the previous lender. If the borrower stays with his bank, one speaks of a prolongation, the change to another lender is called debt rescheduling.
Rescheduling is almost always a better choice in terms of cost.
Reason are the attractive interest rates, which lure in such a case. Because so few people change, the banks set comparatively high interest rates on their prolongation offers. As a result, they earn good money, while borrowers pay relatively high interest rates.
Do not hesitate for wrong reasons
The lack of willingness to change has to do with uncertainty. Many homeowners dare not take this step, fearing that something could go wrong. In addition, they assume high additional costs incurred as a result of the assignment of the lien. Unfortunately, this is unavoidable, the new lender wants to secure enough.
How much these costs are calculated depends entirely on the amount of the land charge (to reduce the costs, you do not lose the entire mortgage, but only the required amount). As a rule, however, it is only about a few hundred euros – by request to the Land Registry can usually determine what costs are approximately expected. This should be deducted from the lure savings interest, so that it is clear whether a sufficient interest savings remains.
Assignment of the mortgage is not very difficult
Even the actual assignment of the mortgage is not very difficult. It is only important that you take care of it in time. But even if time is tight, nobody has to get involved in the prolongation. The existing bank can convert the expired loan into a variable loan, which can be replaced at any time with the new loan.