Special repayment options for mortgage loans

Most people rely on a mortgage loan when buying real estate, only a few can pay for the house or property completely independently and in one act. With a mortgage loan, the borrower should pay particular attention to the special repayment options of the loan. On Astro Finance you can find such a mortgage calculator, which can calculate how special repayments, transferred to your own credit, would have an effect. And that can certainly pay off in individual cases. We explain how and why in the following article.

Attractive mortgages are characterized, among other things, by the possibility of special repayments

General information about mortgage loans

General information about mortgage loans

A mortgage loan offers the possibility of private real estate mortgage lending. With this type of real estate financing, however, anyone who avails himself of a mortgage declares that he agrees to transfer the rights to his property to the person who finances the purchase. Most of the time, the bank is a bank. The property thusserves as a kind of security for the lender who, in return for this contract, takes advantage of the interest to be paid by the borrower. If the debtor can no longer pay his installments, the credit institution has the option of realizing the property and thus repaying the outstanding debt. The money received initially must be returned to the bank or any other lender in installments, the frequency and amount of which can be negotiated individually. The repayer can also make use of so-called special repayments.


Advantages of special repayments

Advantages of special repayments

In short, it can be said that special repayments get a borrower to their home loan faster when it comes to real estate financing, and that even with less interest than is usual with a normal repayment. In addition to saving interest, the advantages of special repayments are that the debtor remains flexible and has the option of paying the loan faster than originally planned and thus becoming debt-free more quickly.


Remain flexible through special repayments

loan payment

By making special payments, the borrower is financially more flexible than with normal installment payments. For example, if he receives additional capital, such as in the event of an inheritance, gift or bonus from the employer, he can pay a large part of his debts with the bank with just one payment. Even the bank has an advantage here, because it receives its money safely and quickly and thus has the opportunity to reinvest it.


Become debt-free faster thanks to special repayments

Become debt-free faster thanks to special repayments

With the special repayments, there is an opportunity to become debt-free faster than originally provided in the loan agreement. Ultimately, these represent additional payments that the borrower can make voluntarily to pay off their loan faster than contractually agreed. However, the maximum number and the maximum amount are specified at the beginning of the loan agreement, which is particularly important for the lender, because if too many and too high special repayments were made, this could have a negative impact on the hoped-for interest rates and the business for him May make it less profitable. The additional payments can therefore also result in prepayment penalties in order to prevent exactly this case, which has just been described.

If you are claiming a mortgage loan, it is advisable to inform your credit institution about it when preparing the loan contract or in advance. It is common for a bank to allow special repayments of up to three, five or even ten percent of the previous loan amount per year. If you take advantage of the option of special repayment, the term of the loan is shortened depending on the amount of the payment made.


Save interest through special repayments

debt repayments

If you take advantage of the option of special repayment, it is also possible to save interest. If the borrower pays a special repayment, this reduces the total amount still to be paid and thus the interest that is due for this total amount in each repayment installment. Especially in the case of financing with a high interest rate, this can be a decisive criterion for choosing construction financing with a special repayment clause.

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