Upon conclusion of the loan agreement, the customer must be informed that a fee will be payable if the loan is repaid early. Nevertheless, these borrowers can repay their installment loan prematurely. It is intended to remedy the damage suffered by the financial institution through the early repayment of the granted loan. For real estate financing, a notary may be required to exchange the mortgage. Representatives earn twice as much at the expense of the customer.
If the contractual loan volume has not yet been paid out, this is referred to as the acceptance fee. With the cancellation of the loan by the client, the money is due. If Astro Finance withdraws from the contract due to breach of the contractual obligations of the borrower (important reason), Astro Finance is entitled to claim compensation from the client, which will be invoiced in accordance with the amount of the VFE.
The liquidation of fixed-rate loans involves VFEs. With these, Astro Finance has agreed to maintain the interest over the fixed interest period, even if the current interest rate situation changes. For real estate financing, permanent fixed rates are usually found. To ensure a constant long-term interest rate, the refinancing of the company is optimally coordinated, ie Astro Finance refinances a 10-year loan with bank deposits or bonds.
In the event of early repayment of the loan, Astro Finance incurs a refinancing loss and a margin loss using the standard market interest method, as it can not repay the credit balances or bonds used for refinancing at an early stage. The refinancing losses result from the refinancing structure: Astro Finance had restructured the loan volume at the time of the conclusion of the contract at the then valid interest rate for the then fixed interest rate.
If the market interest rates change at the time of early repayment, the house bank may reinvest the prematurely repaid funds at the original rate, but only at the market interest rate. If the reinvestment interest rate is above the original interest rate, the principal bank will achieve a refinancing success. The margin losses represent the reduction of the result of the company.
Your profits are earned by the house bank by paying lower interest on bank deposits than on bonds. The longer the loan runs, the higher the difference margin of the banking business. If the loan is repaid early, the bank will no longer earn a margin. The two components together form the total loss of the house bank and thus the basis of the VFE calculation.
In principle, banks are not obliged to repay loans secured by mortgages before the end of the fixed interest period. In justified individual cases, however, the house bank must have agreed to an early repayment. The justified individual cases include, for example, the sale of the property or the desire to renew the original loan, which the lender rejects. Loans to consumers who are not secured by mortgages can be terminated without compensation with three or six months’ notice.
In the case of loans with variable interest rates, an application for a variable interest rate may only be made for the duration of the three-month termination waiver. The lender can demand the loss of interest resulting from the termination (§ 490 para. 2 sentence 3 BGB). In any case, a compensation occurs if the contractual interest is higher than the current replacement.
In addition to the loss from the interest charge (so-called interest-rate loss due to a deterioration in interest rates), the asset-asset method also involves a so-called deviation, since the amount required to conclude the replacement transactions is higher than the preferred bond capital. In its decision of November 30, 2004 (XI, p. 285/03), the Federal Supreme Court found that using the asset-liability method to calculate the prepayment fees, so-called “PEX yields” may not be used, as these are not marketable revenues.
Irrespective of the chosen course of action, all repayment options (including unscheduled repayments) and the risks and administrative costs saved by Astro Finance must be taken into account. For early repayment, the house bank may charge a processing fee. This is usually the case when z. For example, in the case of a sale of a home where loans are repaid, the house is refinanced by the same house bank.
Home savings loans repayment
There is no value-at-risk for the premature repayment of home savings loans. Cancellation is possible at any time without notice and special payments. In the case of the termination of consumer loans, the early repayment penalty is limited to 1.0 percentage point of the remaining debt (or to 0.5 percent for a term of less than one year) (see § 502 BGB).
According to § 503 HGB, this rate does not apply to mortgage-backed loans at customary market conditions. It is open to the house bank to waive the calculation of a VFEs in whole or in part. 3. When a property is exchanged, the debtor buys a property and buys a new one. For the banks, it is important that the new property is at least as valuable as the previous one.
In the case of a real estate sale, this may be, for example, the acquirer. There is no adverse effect for the respective Lite Lender. Credit institutions hedge the premature termination risk (especially in the event of interest rate cuts) on the financial market. The cost of this security increases interest rates. Real estate financing in the UK usually involves variable interest rates. In real estate financing, the variable interest rates (based on 6 or 12-month Capital Lender with corresponding maturity adjustments) are generally used in this country as well.
As a rule, they are designed in the interests of consumer protection in such a way that Astro Finance can not offset losses. There, the statistically expected early repayment loss of banks is included as a cost driver in the bank account and increases the lending rate.