The Ongoing Loan is a follow-up financing that is concluded during the term of an existing loan. In this way, the borrower can already secure low interest rates up to three years in advance.
Whether or not a Ongoing loan should be concluded depends in the end on what the interest rate trend is forecasted to be. If interest rates are particularly low and an increase is very likely in the future, it pays to think about a Ongoing loan. With a low-interest Ongoing loan, you can save money after the end of your fixed interest period.
The advantages of a Ongoing loan
For borrowers, the Ongoing loan offers many advantages. Thus, they secure a follow-up financing to an existing loan at a consistently good interest or even at lower interest rates than they are now available. This represents an interest rate security and planning security, which is often particularly important. After all, it is not uncommon for interest rates to rise and the overall rate for the current loan to skyrocket. Higher interest rates can thus quickly become a major burden for the borrower. It is therefore worthwhile observing the interest rate market a few years in advance and, if necessary, securing low interest rates via the Ongoing loan.
The disadvantages with the Ongoing loan admission
But the Ongoing loan also has one or the other disadvantage that you should know before graduating, of course. Of course, the desired interest rate security is not free of charge. The lenders pay for them with interest premiums that vary from bank to bank. This premium is based on the term of the Ongoing loan and is around 0.6 percent at 24 months, for example. It is therefore necessary to estimate before completion whether this will pay off in the long run. Also keep in mind that you are entering into a contract with the Ongoing loan. Should interest rates continue to fall further in the near future, contrary to your expectation, you will still be bound by the interest rates stipulated in your Ongoing loan. It is therefore essential that you inform yourself thoroughly and observe the interest rate market over a longer period of time in order to draw correct conclusions. Alternatively, simply ask your house bank for advice.
Which Ongoing loan providers are there?
o if the real estate loan agreement ends in a few years, you, as a real estate owner, can secure the current low interest rates with a Ongoing loan.
Further helpful information about real estate loans and real estate loan comparison can be found in this article.