Advance loan

This article explains the advance loan in connection with a building society loan agreement; for the other meaning as an interest hedge see forward loans .

An advance loan is a combination of a loan with the simultaneous conclusion of a home loan and savings contract as a repayment replacement service .

The basic model

In addition to the usual bank building loans, there is the option of choosing an advance loan with repayment through a new building loan agreement to be concluded within the scope of real estate financing.

If the borrower needs a loan of e.g. B. € 100,000 he takes out an advance loan of € 167,000 and concludes a home loan and savings contract for the same amount. The home loan and savings contract is now immediately saved with € 67,000 and the € 100,000 is available for real estate financing.

The savings of 40% of the home loan savings amount ensure that the home loan and savings contract is allocated quickly. After allocation, the advance loan is replaced by the building society loan agreement and the building society loan contract is regularly repaid.

effect

The building societies advertise this model with fixed interest over the entire term. A fixed interest rate is agreed upon until allotment (which is usually relatively cheap due to the short fixed interest rate). After the allocation, the regular low-cost building society loan rates apply.

However, these low interest rates hide the overall cost of the model. The loss of interest must also be factored into the total costs, which arises from the fact that the building society capital was invested at a very low credit interest rate, but at a significantly more expensive advance loan interest rate.

The effective interest rate of the full model is therefore higher than that of a comparable annuity loan .

Furthermore, the repayment is extremely fast, which leads to high rates.

variants

Instead of an immediate top-up, regular savings can also be made on the home loan and savings contract.

In order to reduce the high installments, it is also offered to divide the loan amount into two or three parts, which are repaid through savings contracts that are to be saved one after the other.