Comprehension question: follow-up financing

Hello,

can someone tell me exactly how the notice periods work when you want to terminate a loan with a 15-year fixed interest period after 10 years and how you actually proceed in practice? On the internet and in the legal text I have found that the notice period is 6 months. If the loan was paid out on 5.5.2004, can/must I already take action now, or does that only start in May with effect in November 2014 (which rather corresponds to what I find)? In addition to the 15-year loan, we also have a KFW loan with a 10-year fixed interest period on the property, which expires at the end of March 2014. Would one then bridge finance that to ultimately have one loan?

Unfortunately, it is also not yet clear whether we can possibly sell the flat to our tenants, see if we find another buyer, or keep the thing and then possibly also switch the loan to our local bank, which finances our current residence.

Many thanks!

You can terminate whenever you want. However, it only applies from six months after the full receipt of the loan funds = November 14! The notice period is at least six months. And yes, you would have to have the KfW loan temporarily financed through your house bank in order to then consolidate both loans (if you want to).

In addition to the 15-year loan, we also have a KfW loan for the property with a 10-year fixed interest period, which expires at the end of March 2014. Would you then bridge-finance it in order to have a loan at the end?

Unfortunately, it is also not yet clear whether we might sell the apartment to our tenants, see if we can find another buyer, or keep the thing and possibly switch the loan to our local bank that finances our current place.

I can't tell you much about the notice period since I haven't dealt with it. But nordanney’s statement is understandable.

Regarding the KfW loan and the uncertain situation, a variable loan as a bridge financing is recommended. The interest rate corresponds to the current Euribor rate + the bank’s margin. Usually, it should be cheaper than a long-term financing. Also, there is a more flexible repayment possibility. Once you are sure how to proceed, you can convert it into one with a fixed term + fixed interest rate.

The only downside - you might become dependent on the bank when extending it. Oh yes (theoretical downside) - and the bank could terminate a variable loan more quickly (but what reason would they have to do that if everything is running correctly).

Without knowing the exact text of the contract regarding notice periods, everything one can say here is basically speculation. :)

Hello

everything was already said in November 2014.

Briefly about the Kfw loan. I have to disagree.

With Kfw, you can usually make a full early repayment at any time. In your place, I would ask Kfw this in writing.

Thus, you would have the pleasant situation of taking out a follow-up financing for both loans and combining them into one loan.

If this is not possible!:

The 2nd option would be follow-up financing at 2 dates. You don’t need an expensive interim financing! You have 2 loans with 2 repayment dates and usually, you will find banks that accept this. It is totally unproblematic! After repayment of the 2nd loan, the next bank always has the first rank!

Since this is an older KfW loan, I assume it is from the homeownership program. There are no unscheduled repayment options available.