Pre-financing as a combination of a loan and home loan contract
Home savings loans are granted in the course of a building society contract. If you would like to save money for a house with a home savings contract, you can initially negotiate an optional home loan that you can use after a certain saving period. The interest is fixed when the building society contract is agreed, so that you can secure cheap interest.
The home loan is a repayment loan.
Notifying home savers of a precise date for the allocation maturity and payment of the home savings sum may result in a financial gap.
In addition, the time for payment depends on certain factors that have to be taken into account:
- Contract duration
- Minimum saving time
- Rating number
- Allocation order
Because of these factors, pre-financing may be necessary to bridge the gap. It is almost always in the medium term, since money will be available in the foreseeable future. The pre-financing can be terminated at the latest when the allocation is ready.
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Bank first apply for a so-called bank advance loan or bridging loan, which is usually granted as a maturity loan.
It will then be replaced with the help of the building society contract concluded later and the amount of the building society that is ready for allocation. The builder pays interest on the loan and the savings installments at the same time. As security, banks usually require the entry of a lien in the land register.
Conditions with a long fixed interest period.
- Many customers appreciate pre-financing primarily because it provides great planning security. In addition, no repayment is required for the loan. The interest rate for the loan is not set freely by the bank, but is based on a reference interest rate.
Further disadvantages lie in the transparency of the two interlocking contracts, which is not always optimal, and in the poor ability to plan the speed at which repayment takes place. The reason for this is the fact that the focus of the payments is first on the building loan contract and not on the loan.