Forward loan – how you can secure favorable follow-up loans
Real estate financing is a long-term commitment that requires careful planning. The forward loan is a frequently used option to secure the interest rates for the follow-up financing early on.
This involves taking out a new loan during the term of the current loan, which will not be used until a later date. The aim is to secure the currently valid low interest rate level today and to be able to benefit from a favorable follow-up financing later on.
In the wake of low interest rates, the market offers many opportunities to take advantage of a forward loan. It is important to carefully compare individual requirements and the offers of different providers in order to find the best possible deal.
Here’s what to look for when choosing a follow-up loan and how to secure a favorable forward loan.
Find out now and secure the best conditions for your follow-up financing!
Forward loan – what is it?
A forward loan is a loan that you can take out today, but will be paid out in the future. It allows you to secure currently favorable interest rates on a loan that won’t be needed until a later date, such as for follow-up financing on a property.
The forward loan offers you security, as you can set the conditions for the future today and protect yourself against rising interest rates. A lead time of several years is possible with many providers.
However, with a forward loan, you must remember that you will have to pay a certain interest rate premium for this option. The longer the lead time, the higher this markup can be. Therefore, you should carefully consider whether a forward loan makes sense for you and whether the markup is an acceptable risk for you.
- Advantages of a forward loan:
- Early securing of favorable interest rate conditions for the future
- Protection against rising interest rates
- Disadvantages of a forward loan:
- Interest rate may be higher than on a conventional loan
- No flexibility in choosing the time of disbursement
If you are interested in a forward loan, you should compare different offers and get detailed advice.
Why a forward loan is attractive at the moment
Forward loans offer the opportunity to secure currently favorable follow-up loans. Especially in times when interest rates are low, this option can be particularly attractive. With a forward loan, borrowers can secure a future follow-up loan at a fixed interest rate at an early stage.
Another advantage of a forward loan is that borrowers can protect themselves against interest rate increases. Since the interest rates are already fixed for the future, possible future interest rate increases can be leveraged out. Thus, they also offer a certain degree of planning security for the future.
Another advantage can be that borrowers get early planning security for their real estate project. Particularly in the case of construction projects, it can be helpful to know what costs can be expected for the follow-up loan.
However, it is always advisable to inform yourself extensively in advance and obtain various offers in order to ultimately find the best offer for your individual situation. When deciding on a forward loan, you should also consider possible disadvantages such as higher interest rates or an early repayment penalty in the event of early repayment.
How to secure a favorable follow-up loan
A forward loan is a popular financing option for people who need follow-on financing but expect interest rates to rise. With a forward loan, you can take out a loan today at the current lower interest rates, but it will not be paid out until a later date. How to protect yourself against the risk of rising interest rates.
To secure a favorable follow-up loan, you should consider several factors. First of all, you should take care of follow-up financing in good time and not wait until shortly before the end of the fixed interest rate period. A forward loan can be concluded up to 60 months in advance.
- Look for a suitable lending institution that offers attractive interest rates.
- Compare the conditions of different providers.
- Be aware of costs such as commitment interest or forward surcharges.
Another factor is your credit rating, as your credit score will affect the interest rate you will receive. A good credit rating can help to achieve a better interest rate. Before applying for a forward loan, you should therefore check your Schufa records and, if necessary, have them cleared.
Ultimately, you can secure a favorable follow-up loan by informing yourself well, acting in good time and paying attention to your credit rating. With a forward loan, you can hedge against rising interest rates and find a favorable financing solution for the long term.