Reasons to refinance

In most cases it is possible to settle an existing long-standing debt by taking out a new one. Above all, when an existing loan with poor interest conditions can be replaced by a significantly cheaper loan, refinancing a loan is recommended.

Balancing out an overdraft can also be considered refinancing. If the negative balance of the account or credit card cannot be cleared for a long period, high costs arise due to interest. Refinancing with a favourable installment loan can save a lot of money. In addition, the lower interest burden makes it easier to pay off debts.

A key goal of refinancing is the restoration of one's creditworthiness. At the same time, conditions such as the interest rate improve for any potential new loan.

Comprehensively covered

Anyone considering refinancing should, if possible, carry this out towards the end of the term of an existing loan. Contrary to widespread claims, refinancing is generally extremely uncomplicated.

As a rule, lenders also waive charging an additional fee for early repayment of the loan. Nevertheless, costs that arise in the context of a transfer or assignment of the Grundschuld should be taken into account in the calculation. In most cases these are relatively low.

If you are registered as a borrower with a reputable bank, you can usually rely on the assignment of the debt being handled by the respective bank. This eliminates the need for a laborious cancellation and re-registration of the old Grundschuld.

Similarly, for any follow-up financing, it is advisable to compare the conditions offered by different banks. New customers often benefit from more favourable terms and can thus save real money over the entire term.

Due to reduced loan-to-value ratios as a result of repayments and special repayments, further savings can be achieved. Most banks also advertise in the case of refinancing the reimbursement of costs incurred for the notary and land register.

Is refinancing just a drop in the ocean?

As a rule, before refinancing all costs should be taken into account in the calculation. If the lender, for example, charges a so-called Vorfälligkeitsentschädigung for the lost interest profit due to early repayment, it may well be that refinancing does not really pay off.

An attractive alternative to refinancing are above all loans without Schufa: they are generally granted without a prior Schufa inquiry and are usually limited to smaller amounts. However, the costs incurred for these should also be compared in advance with the costs of refinancing.