Real estate concept:
Prolongation
26.04.2024
What is a prolongation of a property loan?
A prolongation of a property loan refers to an extension of the original term of the loan agreement. As a rule, this happens when the agreed term of the loan has expired but the borrower is not yet able to repay the loan in full.
By renewing the loan, the borrower can extend the term of the loan and thus fix their monthly instalments. A prolongation can be advantageous for both the borrower and the lender. For the borrower, extending the term of the loan can mean financial relief as it gives them more time to repay the loan. A prolongation can also be advantageous for the lender, as they can continue to receive interest on the loan.
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What are the conditions for extending a property loan?
If you have taken out a property loan, the original term may not be sufficient to repay the loan in full. In this case, you will need to extend the loan in order to continue making monthly instalments. The extension of a property loan is known as a prolongation.
The conditions for a prolongation depend on various factors. First of all, you should be aware that a prolongation is usually associated with additional costs. These can vary depending on the bank or lender. As a rule, the bank will offer you a new interest rate, which may be higher or lower than the original interest rate depending on the market situation. Your previous payment history also plays a role: If you have always paid your instalments on time in the past, this increases your chances of a successful extension. However, if you have had payment difficulties in the past or your instalments have been late, this may mean that the bank will not offer you an extension.
Finally, the current value of your property is decisive when it comes to possibly obtaining an extension. If the value of your property has risen in the meantime, this can lead to the bank offering you better conditions for the extension. On the other hand, a fall in the value of the property may result in the bank offering you less favourable conditions or even refusing to extend the loan.
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What are the advantages and disadvantages of extending a property loan?
A prolongation can be particularly advantageous if you would get into payment difficulties due to increased interest rates and would have to take out a new loan at higher conditions. In addition, a prolongation is generally associated with lower costs than taking out a new loan, as the costs for the land charge entry and property valuation, for example, are eliminated. However, there are also disadvantages. On the one hand, the term of the loan is extended, which can lead to higher interest costs overall. Secondly, a prolongation is usually carried out at the current market conditions. If interest rates have fallen significantly in the meantime, it may make more sense to take out a new loan.
Can a professional mortgage broker help me to extend a property loan?
Extending a property loan can be a complex matter. A professional mortgage broker will help you make the best decisions and achieve the best conditions for the extension. They will help you understand the various options, compare offers, negotiate interest rates and analyse the terms of the new contract in detail. In this way, you will find the solution that best suits your situation.
A good finance broker will also be able to help you plan your finances. They can help you calculate your monthly payments and understand how an extension will affect your overall finances. In the end, you save time and money: the broker has access to the latest information and market trends and can help you make the best decision for your needs.
