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Forward loan: Secure low interest rates for your move!
A move is imminent and you want to secure the currently low interest rates for your follow-up financing? That is possible with a forward loan. Find out now about the advantages and disadvantages, the costs, and what you should consider before you decide on this option. Find the right financing for your move – contact us for personal advice.
The topic short and concise
A move is imminent and you want to secure the currently low interest rates for your follow-up financing? That is possible with a forward loan. Find out now about the advantages and disadvantages, the costs, and what you should consider before you decide on this option. Find the right financing for your move – contact us for personal advice.
A move is imminent and you want to secure the currently low interest rates for your follow-up financing? That is possible with a forward loan. Find out now about the advantages and disadvantages, the costs, and what you should consider before you decide on this option. Find the right financing for your move – contact us for personal advice.
A move is imminent and you want to secure the currently low interest rates for your follow-up financing? That is possible with a forward loan. Find out now about the advantages and disadvantages, the costs, and what you should consider before you decide on this option. Find the right financing for your move – contact us for personal advice.
Planning a move and want to protect yourself against rising interest rates? Discover how a forward loan can offer you planning security and what costs are involved. Find out more now!
Planning a move and want to protect yourself against potentially rising interest rates? A forward loan can help you secure the current, often favourable interest rates for your future real estate financing. At GoMovin, we understand how important planning certainty is during a move, and we would like to introduce this financing tool to you.
A forward loan is essentially a form of follow-up financing where you can secure the terms for a loan today, which will only be disbursed in the future. It is similar to an annuity loan but additionally offers you an interest and term guarantee. This is particularly interesting if you expect rising interest rates and want to secure the current low rates for the long term. Find more information on the basics of real estate financing here.
The main advantage of a forward loan is in the securing of low interest rates. You protect yourself against unexpected interest rate increases and can better plan your move financially. This provides planning certainty, as you already know today what monthly payments to expect in the future. Compared to other financing models, the forward loan offers particularly high planning security, which is advantageous for such a significant step as a move. Further information on the significance of moving can be found in our article /umziehen-nach-bedeutung.
Up to 5.5 years in advance: How the forward loan works
The core of a forward loan is the so-called forward phase. This refers to the period between signing the contract and the actual disbursement of the loan. During this time, payments are generally not required. You can usually take out a forward loan up to 5.5 years in advance to secure the currently favourable interest rates, as Dr. Klein reports.
A interest surcharge, also known as the forward rate, is applied during the forward phase. This surcharge compensates the bank's risk for the period in which it guarantees you the interest rate. The interest surcharge is added to the nominal interest rate and typically amounts to 0.01% to 0.05% per month of the lead time. It is important to consider this surcharge when calculating the total costs. Clever Baufinanz explains the details of interest calculation here.
An important aspect is the distinction between true and false forward loans. With a true forward loan, the fixed interest period begins with the signing of the contract, whereas with a false forward loan, it only begins with the disbursement of the loan. This affects the duration of the guaranteed interest period and should be considered when choosing the right loan. True forward loans offer long-term interest security, while false forward loans offer lower costs and greater flexibility.
Minimise interest surcharges: Avoid cost traps with forward loans
In addition to the previously mentioned interest surcharge, which increases with the length of the forward period, there are further costs that may arise with a forward loan. It is therefore advisable to compare different offers to minimise costs. Schwäbisch Hall provides detailed information on this.
If you change banks as part of your move, costs for the transfer of land charges or new registration may arise. You should also keep an eye on switching fees and the costs for a renewed credit check. These additional costs can significantly affect the total cost of the loan. Therefore, compare not only the interest rates but also all ancillary costs to make an informed decision.
It is crucial to carefully review the contract terms, including interest rates, special repayment rights, and termination conditions. A careful analysis of the contract terms protects against unexpected costs and obligations. Baufi Deutschland emphasises the importance of contract review here. If in doubt, consult an expert to understand all aspects and find the best option for your situation.
Interest Security vs. Contract Commitment: Weighing up the Pros and Cons
A forward loan provides you with several decisive advantages. First and foremost, interest rate security, which protects you from rising interest rates. This allows for long-term planning certainty, as you already know your monthly instalments. Planning certainty is particularly valuable when moving house, as it enables better budget calculation.
However, there are also disadvantages and risks to consider. The interest surcharge for the forward period increases the total cost of the loan. Additionally, you are bound to the contract and must take the loan even if interest rates decline in the meantime. This obligation can be a disadvantage if interest rates fall. In the worst-case scenario, a non-acceptance penalty, or penalty payment, threatens if you do not take the loan.
To make your decision easier, we have summarised the key advantages:
Interest rate security: Protection against rising interest rates.
Planning certainty: Long-term financial planning possible.
Budget control: Fixed monthly payments from the outset.
It is therefore important to carefully weigh the pros and cons and consider your individual situation. Comprehensive advice helps you make the right decision. Verivox offers a calculator for an initial assessment here.
Staying Flexible: Understanding Cancellation Rights and Early Repayment Penalties
Under certain circumstances, you have the option to cancel a forward loan. After 10 years of loan duration, there is a special termination right with a 6-month notice period. Cancellation may also be possible if you sell the property, for example, due to separation, relocation, or death, as Dr. Klein explains. Check your termination rights to remain flexible.
Within 14 days of signing the contract, you have a right of withdrawal. If you terminate the loan early, an early repayment penalty may apply. This compensation offsets the bank's lost profit due to the early termination. The amount of the early repayment penalty depends on various factors, such as the remaining term of the loan and current interest rates. Find out about the conditions for a possible early repayment penalty.
The principle generally holds that "a contract is a contract", but there are exceptions. A defective right of withdrawal notice can also allow for termination without a non-acceptance penalty. A thorough review of the contract is therefore essential. If in doubt, seek legal advice to know your rights and choose the best course of action.
Building savings or refinancing: Exploring alternatives to a forward loan
In addition to the forward loan, there are other options to secure your future. An interesting alternative is the building savings contract. This offers you long-term fixed interest rates and flexibility without the obligation to purchase. A building savings contract can be a good option if you plan long-term and wish to remain flexible. Schwäbisch Hall provides further information on this.
A debt restructuring can also be a sensible option. You review other financing offers and, if necessary, switch to a cheaper provider. Debt restructuring can be worthwhile if you find better terms. Carefully compare the different offers, taking into account all costs, including potential fees for the mortgage transfer.
The choice of the right financing option depends on your individual situation and goals. Take the time to examine the various possibilities and find the best solution for yourself. Professional advice can help you make the right decision and achieve your financial goals. GoMovin is happy to assist you with your relocation planning and selecting appropriate financing.
Pay attention to the energy certificate: How it affects refinancing
The current market situation and interest rate trends play a significant role in the decision to opt for or against a forward loan. Monitor market developments and analyse the current interest trends. A well-founded analysis of the market situation will help you identify the right time to finalise a forward loan.
Since 01.01.2024, an energy certificate is required for subsequent financing. This affects the valuation of your property and can therefore also influence the conditions of your loan. Ensure you have a current energy certificate to obtain the best possible conditions.
Interest rates for forward loans depend on general interest rate developments. Regularly update yourself on current interest rates and seek advice from an expert. This way, you are well-informed and can make the right decision for your financial future. GoMovin is here to support you with advice and assistance to make your move as smooth as possible.
Carefully examine and compare: This is how you find the best forward loan
A forward loan can be a sensible option to protect yourself against rising interest rates and gain planning certainty. However, it is important to carefully weigh the pros and cons and consider your individual situation. A thorough examination of your individual situation is crucial for an informed decision.
Obtain offers from various providers and compare them. Pay attention not only to the interest rates but also to all ancillary costs and contract conditions. A comprehensive comparison of different offers will help you find the best forward loan for your needs. Use online calculators and comparison portals to get an initial overview.
We at GoMovin recommend seeking professional advice. An independent financial advisor can help you evaluate the different offers and find the best solution for your situation. Engaging professional advice can save you a lot of time and money. This way, you are well-prepared and can approach your move with ease. Are you planning a move and looking for professional support? Our moving assistance offers you comprehensive support in all aspects of your move. From planning to execution – we are here for you.
Planning a move and want to protect yourself from rising interest rates? We at GoMovin help you keep track and find the best financing solution for your move. Contact us today for a non-binding consultation and benefit from our expertise. Visit our contact page to learn more!
Further useful links
The Sparkasse provides detailed information on the topic of forward loans and their use in construction financing.
Interhyp offers comprehensive information on forward loans and their terms.
Finanztip explains the advantages and disadvantages of forward loans and gives tips for optimal use.
Kreditanstalt für Wiederaufbau (KfW) offers funding programmes in the area of building and living, which can be used in combination with a forward loan.
The Handelsblatt reports on current developments in the financial markets and their impact on interest rate trends.
FAQ
What is a forward loan and how does it help when moving?
A forward loan is a type of follow-up financing where you can secure today's interest rates for a loan that will only be disbursed in the future. This is particularly useful if you are planning a move and want to protect yourself against potentially rising interest rates.
How far in advance can I secure a forward loan?
You can usually secure a forward loan up to 5.5 years in advance to lock in the current interest rates. This provides you with certainty in planning your move.
What is the difference between a genuine and a non-genuine forward loan?
With a genuine forward loan, the interest rate lock-in period begins when the contract is signed, while for a non-genuine forward loan, it starts when the loan is disbursed. Genuine forward loans offer long-term interest rate security, whereas non-genuine forward loans are generally less costly and more flexible.
What costs are associated with a forward loan?
In addition to the usual interest, there is an additional interest surcharge (forward interest) for the forward period. This typically ranges from 0.01% to 0.05% per month of the lead time. Also compare the additional costs such as land charge transfer or credit check.
What happens if I do not take the forward loan?
If you do not take the forward loan, a non-acceptance penalty may be incurred. This compensates the bank for lost profit. Avoid these costs by planning carefully.
Are there alternatives to the forward loan?
Yes, an alternative is the building savings contract, which offers long-term fixed interest rates and flexibility. A debt restructuring to a more favourable provider may also be an option. Explore all possibilities to find the best solution for your situation.
Can I cancel a forward loan?
After 10 years of the loan term, there is a special right of termination with a six-month notice period. You have a right of withdrawal within 14 days of signing the contract. Review your cancellation rights to remain flexible.
What role does the energy certificate play in follow-up financing?
Since 01.01.2024, an energy certificate is required for follow-up financing. This affects the valuation of your property and can therefore also influence the terms of your loan. Ensure you have a current energy certificate.
