Home financing canceled despite payments, house now double the value

Hello,

My acquaintance bought a used house with land about 10 years ago for €200,000. In 1-2 years, the financing renewal would have been due. But since she is still paying 3.5% on the old financing and interest rates are currently quite low, she wanted to extend the refinancing now to save some money under new conditions. However, since her income situation has somewhat worsened, but she can still pay without problems, she thought nothing of it and submitted the documents to the bank where she financed. Shortly before New Year's Eve, she then received a letter from the bank stating that refinancing would not be possible based on the figures. The land is now worth about 130% more than 10 years ago. She actually does not want to sell because she can continue to make the payments. She receives financial support from her parents if something is missing. She has already made an appointment with Hausanker, but I told her I would check if there are other options; it really can’t be that someone who always pays and now temporarily doesn’t fit the usual criteria has to sell their house and move out, or am I wearing rose-colored glasses here? Maybe someone has had a similar experience and can give some tips. Best regards

Without a few more concrete details, it will be difficult to provide advice here. Is the house solely in her name? How much outstanding debt remains? What was the annuity amount? What are the "numbers" that look worse? Has she already inquired with other banks?

Unfortunately, banks are forced to determine the debt service and are no longer allowed to rely on the collateral, meaning the high value in relation to the loan. Possibly, the parents can help as guarantors as long as the income is not yet sufficient.

So if you do not take out a new loan or increase the loan, the bank where the financing currently runs does not check the creditworthiness, but sends the customer a "Prolongation offer" where the financing is extended for 5-10-15 years after the interest rate lock-in period expires.

Therefore, I ask myself why they sent the "Einkommensnachweise" there?

As I said, normally you make a call to the house bank, say: I am thinking about extending the financing now, send me an offer and that's it...

Unless there was already a "Zahlungsstörung" i.e. one or the other installment was not paid (even if it was paid later), because then the bank has an argument to probably decide against it.

According to WIKR guidelines that have been in effect since 2016, it is not easier to get something from other banks. Therefore, I often tell customers who have no regular income (unemployed, incapable of working, etc.) to just do a follow-up financing with the house bank because it goes without a check. (If one has always paid properly!)

But we are also somewhat in the dark here... so I assume the house was bought for 200,000 about 10 years ago. Probably 1% repayment? So around 175,000-180,000€ follow-up financing? If the house is worth 400,000€, or even more, the bank does not care if the capital service is not good (the income is not enough for living expenses/installment/maintenance).

Therefore, it would be good to get this information first.

She has already made an appointment with Hausanker, but I told her I would check if there are other options; it really can't be that someone who always pays and now, for an indefinite period, the numbers don't fit into the usual scheme, has to sell their house and move out, or am I wearing rose-colored glasses here?

Who says she has to sell? The bank only says – and is allowed to say this – that the creditworthiness is not sufficient for an extension.

Well, if you don't take out a new loan or increase it, the bank where the financing currently runs does not check creditworthiness, but sends the customer a "prolongation offer" where the financing is extended for 5-10-15 years after the end of the fixed interest rate period.

But this is about a forward, and the customer also has

and submitted the documents to the bank

It should be normal for the bank to look at the documents then.

can give some tips.

Go to the financing advisor and see if there is a new financing option there. If not, then a

She can still pay without problems anyway

is not the whole truth.

You need to be specific. How high is the outstanding balance of the loan to be redeemed, how high is the market value.

Who finances, do you have children in the household and what income do you have.

If you are already receiving support, the father/mother/supporter might be willing to guarantee or co-finance.