The construction financing for your property is not yet paid off; in addition, your overdraft is regularly in the red, your credit card is overdrawn, and you are making monthly payments on your car? Then think about combining your existing loans together. This can be worthwhile for you if you regularly run out of money at the end of the month or if you lack an overview of your finances.
By rescheduling your installment loans and other current financing, you'll save significantly on rates each month. We explain to you when it is worthwhile to combine loans, what you should pay attention to and what advantages you can benefit from.
What does it mean to summarize credits?
If you have two or more loans and combine them into a new loan, this is a form of debt restructuring. By taking out a larger loan, you pay off your existing installment loans and other debts.
You can combine the most different loans: an installment loan for your new furniture, a car financing, your real estate financing and your overdraft facility. The total of all installments you pay to your lenders monthly for this is often very high. By combining your loans, you can significantly reduce your installments and save interest on top of that.
When is it worthwhile to consolidate existing loans??
There are many reasons to restructure your installment loans and other current loans:
Pool your loans and pay lower rates
You have several loans running and are starting to lose track of your finances: Consumer loans, plus the overdraft facility constantly at the limit and the credit card overdrawn. In addition, you have owner-occupied residential property – a house or an apartment that you have already paid off in full or not yet.
Perhaps your financial situation has deteriorated unexpectedly. A regular income has been lost, or for health reasons you or your partner can no longer pursue your work. The reasons are many. However, you can no longer service the installments of your current loans as usual.
To regain financial leeway, it pays to consolidate your loans. The rate savings here can be immense.
Take advantage of interest savings due to current low interest rates
Interest rates are still low. This may change soon. The U.S. Federal Reserve (Fed) recently announced a rate hike. This could herald a turnaround in the previous low interest rate policy, even though the European Central Bank (ECB) has yet to announce any changes.
You will benefit from a debt restructuring especially if you are paying high interest rates on your old installment loans. In the long run, for example, a construction loan with high interest rates will add up to many thousands of euros. Take advantage of the current low interest rates and reschedule your debt.
Convert short-term loans into long-term ones
Installment loans with a short term usually have a higher interest rate than loans with longer terms. As a borrower, you pay higher interest rates for consumer loans than for construction loans. You will be charged extra high interest if you overdraw your checking account or credit card. A debt restructuring is worth cash money there. A long-term installment loan with a longer fixed interest rate usually comes with lower interest rates and lower repayment rates.
Higher loan amount required
Your existing real estate financing isn't sufficient because construction costs have increased, unplanned expenses have been added or renovations are due. For a higher loan amount, you need a new loan agreement to pay off your existing loan.
With the additional money from the debt rescheduling you can carry out extensions, conversions and renovations, replant or redesign your garden. The installation of a photovoltaic system or the (energetic) renewal of your heating system can also be implemented with it. Find out in advance whether you can also claim KfW subsidies for this. In addition, you can get a portion of the loan for free use disbursed. This gives you financial freedom again.
What you should look out for when rescheduling your installment loans?
Before you cancel your old loan agreement, you should familiarize yourself with the costs you will incur as a result. Because if you want to terminate your old loan before the end of the term, the bank is entitled to an early repayment penalty. The bank is entitled to claim this compensation, as it loses profits by ending the fixed-interest period early.
Unlike consumer loans, the early repayment penalty for real estate financing is not clearly regulated. It depends on the goodwill of the bank. In many cases, a debt restructuring is still worthwhile.
However, there is an option that allows you to get out of your construction financing without incurring any additional costs. If the fixed interest rate is longer than ten years, you can terminate the contract after ten years without paying an early repayment penalty. You only need to give six months' notice after the ten-year period. The cut-off date is the day on which your loan is paid out in full.
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What are the advantages of debt restructuring??
With a debt restructuring, you benefit from many advantages:
- Only one lender: If you combine your current loans, you only pay ONE loan installment to ONE lender each month. This gives you a better financial overview, and it's harder to fall behind on that payment.
- Better interest rates: By combining your installment loans and other loans, you can also secure lower interest rates and better terms overall. This is especially the case if the current interest rates are more favorable than with your old loan agreement.
- Longer terms: You can agree on longer terms for your new loan. This means considerable relief for you, as the repayment installments are significantly reduced as a result.
- High rate savings: not only by extending the term, but also by combining several loans, you save a lot of money each month.
- Improved credit rating: the debt restructuring has a positive effect on your Schufa score. Because the redemption of your old loans also ensures a Schufa cleanup and thus a better credit rating.
Consolidate your old loans with Duratio
At Duratio you will find competent contacts with whom you can reschedule your current loans at favorable conditions. Our offer at a glance:
- Debt rescheduling between 25.000 and 300.000 euros
- favorable interest rates and top conditions
- Additional money available for modernization, renovation, additions and conversions
- Unlimited loan terms
- regardless of age
- additional share for free use
- Possible even with negative Schufa entries and poor credit rating
- rapid implementation within a very short time
- Dispobereinigung and credit card balancing
- Individual advice for every situation