Special Loan Repayment

Special loan repayment – two ways

There are two ways of repaying loans: regular repayment and unscheduled repayment. To get out of debt faster, so-called unscheduled repayments are used. Many loan providers offer the possibility of unscheduled repayment. This significantly reduces the advantage of the shares compared to the unscheduled repayment. A question about unscheduled repayment of the loan.

Repayments and unscheduled repayments under the microscope

Repayments and unscheduled repayments under the microscope

Of course, a loan granted to you by the house bank must also be repaid. As a rule, the first tranches are due shortly after borrowing. B. student loans. The repayment period of the borrowed money and the amount of the individual installments are fixed in advance by contract.

Repayment of a loan is also known as repayment. In addition to the regular repayment, there is the option of unscheduled repayment of loans. As a rule, there is a repayment plan according to which the borrower has to pay off the loan business. However, there are also loans that are extremely repayable. There are no fixed tranches and the loan can be returned at its own discretion.

However, this type of loan is quite rare and usually has a high interest rate, since the credit institutions naturally prefer to know when they will see the borrowed capital again. Unscheduled repayments are repayments that occur outside the repayment schedule. Before borrowing, it must be clarified whether there is the possibility of special closures and then recorded in accordance with the contract.

Unscheduled repayments support the borrower either with the early repayment of the loan or with the reduction of the repayment rates, which is of course both beneficial for the borrower.

According to applicable law, this early repayment penalty may not exceed 1% of the amount that is repaid too early. In addition to the loans, we also prepared the Topics credit card and account type in the Outbank Financial Guide.

But here you can save cash with special repayments of your loan – this saving can easily amount to several thousand USD and even 10,000 USD or more is not uncommon.

What are special repayments?

What are special repayments?

You carry out the regular repayment of a real estate loan using the repayment portion in the monthly installments of your loan. If you transfer a margin to the house bank, this is called a special repayment. Such unscheduled repayments are generally not included in the loan agreements and there is no general legal claim to such extraordinary repayments.

Credit institutions can also be located here, but it is best to ask them to include a provision on special repayment options when the contract is signed. In many cases, the mortgage lender grants you this option at no extra charge. However, credit institutions often charge interest premiums of around 0.05 percentage points pa or limit the total amount of possible amortization.

If you have not incurred any further interest expenses due to the option of special repayment, you can only benefit here: Since such a capital market interest rate will probably only remain a pious wish in the near future, alternative unscheduled repayments, thanks to high interest savings, become the perfect investment with a prime yield. Even if the interest rate is slightly above the value for the variant of the special repayment, you can take advantage of these advantages.

However, in order to avoid unnecessary interest payments on your loan, you should be as clear as possible about your financing scope for additional payments. However, a life insurance policy or an investment could become due for payment, which is then used immediately for unscheduled repayments if the amount does not exceed the performance limit specified with the house bank for unscheduled repayments.

Also note that with real estate loans, you have a statutory right of termination after ten years, which can be combined with a full or partial loan repayment. However, such considerations are only relevant if the financial institution requests you for cash for special termination rights or an extended special termination right.