At first glance, home finance is a loan like any other form of finance. However, various framework conditions make the house loan special.
On the one hand, this includes the form of collateral.
On the other hand, this is often only repaid after 15 to 20 years.
It is not uncommon for the repayment to take even longer. Therefore, the adaptation date is approaching at some point.
What is the construction loan behind?
How do builders benefit from the adjustment date?
Fixed interest rates vs. Term – when new conditions threaten
With regard to home loans, sums of more than 200,000 USD are often sufficient today. Even a fixed term of 15 years is often not enough for a complete repayment of the financing.
Therefore, the term and the period over which the agreed building rates are to apply are rarely the same for building money. If the fixed conditions expire and there is still a residual debt in the room, the adjustment date threatens.
Ultimately, this is only the point in time from which new conditions should apply to a home loan. The banks inform the builders about the adjustment date and submit a new offer. The borrower can accept this – or use it to search for an alternative. This means there is no prolongation, but rather debt restructuring.
- Homeowners do not have to wait for the timing of the adjustment. As soon as a house loan has expired for ten years, it can be terminated by the borrower on the basis of Section 489 BGB.
Adjustment date for the variable loan
In addition to fixed-rate finance, some households also use variable-rate real estate finance.
The idea: if the interest rate drops, the building loan becomes cheaper. However, this is generally not a floating rate financing.
Banks usually work with an index value at this point – for example the Reference rate bank. Loan and reference interest rates are checked at regular intervals and adjusted if necessary. If the reference interest rate has increased, the option of the variable loan becomes expensive from the perspective of the building owner.
It is therefore generally necessary to check to what extent:
- Special repayments
- Debt rescheduling or
- Converting to a fixed rate loan
- Unlike in the context of construction financing with a fixed interest rate, the builder can repay the loan at any time with a variable interest rate or cancel it with the notice period.