Extending your mortgage. Adjusting the financing of real estate to new needs
If you extend your mortgage, the focus should be on your needs. Perhaps you would like to simultaneously increase or repay the mortgage? Find out what you should take into consideration when extending your mortgage.
Extending your mortgage upon maturity
If a mortgage expires in the next few months, real estate owners have to think about extending their mortgage. The key questions concern the mortgage amount and type: Should the mortgage be extended in the same scope?
Is the previously selected mortgage also appropriate for the next few years? Or does another mortgage model suit the current needs better?
Perhaps you have started a family, now earn more or less than when you concluded the mortgage, have received an inheritance, or are planning a major renovation. All these scenarios can affect how you extend your mortgage,
The ideal time for extending a mortgage
If you want to extend your mortgage, you have to know when your current mortgage expires. The mortgage is usually extended toward the end of the term. However, with a Forward fix mortgage, it is possible to fix the interest rate up to three years in advance and thus renew the mortgage early. The best would be you to contact your client advisor in this regard. They will discuss your financial situation and your plans with you, in order to find the right follow-up financing for you. Our extension checklist will help you ask the right questions for this. If you would like to renew the same mortgage, you can also extend it yourself online.
Renewing mortgages with partial repayment
When extending your mortgage, it is worth checking whether to repay part of your mortgage voluntarily. It is not possible to reduce the amount of the mortgage during the fixed term. However, you can repay part of the mortgage when renewing the mortgage, and therefore reduce the amount for the extension. If you've received an inheritance or have been able to save a larger amount, partial repayment might make sense.
Extending and simultaneously increasing a mortgage
If the mortgage is renewed, it is possible to increase it under certain circumstances. This is provided that affordability still exists in case of a higher loan-to-value ratio. Reasons for an increase may be a planned expansion or a larger-scale renovation that cannot be paid for through other means. For example, in older buildings, an energy renovation makes sense, but is also expensive.
Under certain circumstances, it may also make sense to increase your mortgage in old age. This is because income usually decreases upon reaching retirement age. If the mortgage is increased, financial leeway also goes up. There is no guarantee that the bank will approve an increase; however, in case of an upcoming renewal, it is worth discussing your personal situation and the need for a mortgage increase.
Adjusting the mortgage model to your own needs
In addition to the time of the extension and the amount of the mortgage, the type and term of the mortgage should also be reviewed when extending. Different mortgage models have various advantages and disadvantages and can be a better choice, depending on your circumstances. The same applies to the term. Depending on your interest rate expectations and your risk profile, you may decide on a different mortgage for follow-up financing.
For example, if you are focused on security, a fixed-rate mortgage with a longer term is probably the right choice for you.
Individually assessing follow-up financing
Because life situations and therefore requirements for a mortgage can change, it is important to fundamentally rethink which mortgage is right for you when renewing. Give yourself enough time to understand your needs. Factors such as the current interest rate situation and expectations for interest rate developments must be taken into account. If you expect interest rates to increase in the future, it may make sense to extend your mortgage early in order to benefit from the current low interest rate.