Those who pay off a loan can experience these days that there are loans with cheaper interest rates than a few years ago. This is because the Demo Lender Bank cut the key interest rate to 1 percent, which also lowered the conditions for loans. The idea is obvious to reschedule the loans with higher interest rates. But what needs to be considered with a debt with debt restructuring?
Notice periods to be observed
In principle, you can convert any loan into a loan with debt restructuring. Installment loans, real estate loans with high interest rates and overdrafts and framework loans that have accumulated. However, one thing should be noted: installment loans and real estate loans must be terminated before rescheduling. And there are various notice periods to consider. The installment loan has a period of at least three months. It is often the case that banks exclude the termination of the loan in the first six months.
This fact means that a notice period of 9 months must be observed. Borrowers of real estate loans have to estimate even longer notice periods.
With this type of loan, termination of the loan is excluded during the fixed interest period. After the fixed interest period has expired, usually after 5 to 15 years, the contract can be terminated at all. By paying a prepayment fee, you can, with the bank’s consent, terminate after 10 years with a notice period of six months.
With the credit line and the overdraft facility, no notice periods need to be observed due to their variable interest rates and terms.
What to look for in a loan with debt restructuring
You should definitely calculate whether the new loan is really cheaper overall, because processing fees must also be included. These can make up up to three percent of the loan. Using the effective interest rate, you can calculate the exact loan cost. It combines nominal interest and processing fees. The prepayment fee has to be included in the real estate loan and, of course, the mistake of comparing a variable interest rate with a fixed one must never happen. The variable interest rate can be cheaper at the moment, but this can change very quickly.