Special Term Loan | Cancellation loan
Cancellation loan for special cancellations
In summary, long-term loans are ten years after the full disbursement of the loan according to 489 BGB resolved without additional costs. For special private reasons such as divorce, illness, unemployment, over-indebtedness, relocation or sale of the property, the BGH is sufficient to terminate a mortgage loan. In addition, I am justified in the concern, in which time context, for example, the beginning of unemployment or illness cases with the Aus?
So how long does the illness / work logistics have to last or is it sufficient, for example, to receive confirmation from the employment agency that one of the borrowers has registered as a “jobseeker”?
Special right of termination and withdrawal for forward loans
Again and again it happens that the customer wants to cancel an already closed forward transaction. Interest rates have fallen in the past time often contrary to customer expectations. Therefore, many customers and customers ask the question: Do you now have to accept the term loan on the specified date and interest? Are there any ways to cancel the expensive term loan transaction?
What are the options of the customer to terminate a term loan? First, the sobering news: The concluded loan agreement is binding on both the lender and the borrower. The forward loan can not cancel the house bank without just cause, because, for example, the lending rates on the capital market have risen.
On the other hand, this also means that you, as the client, do not have the option of having a cheaper loan for refinancing after signing the contract. You can cancel the loan within this time. Legally, they are then placed in the same position as if they had not closed the credit agreement. This gives them, as customers, the chance to refute premature decisions.
The Lessor is required to explicitly assign her as a customer or customer in the course of a contradiction instruction on this occasion. In practice, there have been a large number of court decisions in the past in favor of consumers in connection with the cancellation order. Accordingly, some provisions in the loan agreements have been invalidated with respect to the instruction of opposition. The legal consequence of this was that in the case of credit agreements with incorrect cancellation policy, the deadline was extended indefinitely.
Some borrowers have used this opportunity in the past. The revocation options for debtors had meanwhile shrunk sharply. The fact is that the cancellation of a term credit with high fees at the beginning of the repayment period is accompanied. Here, a distinction is made between the terms “non-acceptance compensation” and “prepayment compensation”. Decisive for the success of both companies is the time of expiry.
However, if the termination occurs after the loan has been disbursed, but within the fixed interest period, BayernLB is entitled to a so-called “prepayment penalty”. The prepayment penalty is a compensation for the loss of interest that BayernLB could have received for the remaining time. For both the early repayment fee and the non-subscription fee for a longer remaining loan period, the expenses can be substantial.
Therefore, it is advisable to calculate exactly here as a client. For the calculation of the advance payment is z. For example, an Excel calculator is available for the Stichting Warmentest. Therefore, consumers should in principle refrain from canceling within the commitment period and the first 10 years. Borrowers are legally entitled to a special right of termination under the following conditions: Nevertheless, BayernLB has the right to demand a prepayment penalty for these reasons as well.
This means that in practice, customers generally have to bear considerable expenses for these termination options. Notice of termination and if the loan has not yet been repaid in full, the notice can be made. Of course, this only applies as long as no new fixed-interest agreement has been reached with the house bank. As a rule, your bank will submit a new takeover offer before the loan commitment expires.
If this takeover offer fails to materialize, BayernLB may pay interest on its residual debt as of the date of expiry of the fixed repayment term in the amount of the EONIA interest rate plus a full spread of around 6 percentage points. You as a customer are well advised not to allow this process. Another important point for the termination of a term credit is § 489 BGB.
According to 489 BGB, the borrowers have the right to limit their term loan after 10 years. The credit agreement must not have been changed within this time. The period starting with the complete payment of the loan amount. The client must comply with a period of grace of 6 months after 10 years. In fact, the termination is effective after 10.5 years.
This often allows consumers to save a lot of money. After expiry of the period of 6 months, the client has two additional calendar weeks to make the remaining claim available to the lender. In this case, the reduction of the cut-off period is not required. If he does not comply with this obligation, it is assumed that the termination did not take place. Especially with forward loans, the question arises when the legally binding 10-year term begins.
It can take several years between signing the contract and issuing the term loan. So far, banks have always believed that the period does not start until the loan is fully paid out. If the term loan is an extension of an existing form of financing with the same lender, it is not the payment date but the conclusion of the contract for the beginning of the notice period (judgment of 14 September 2015, Az. I-1 O 68/15).
The consequence of this judgment is that consumers who have taken out a term loan with the same credit institution after their initial financing can terminate their contract ahead of time. In the case of consumers who, in turn, have taken out a term loan from another credit institution after their initial funding, it is unlikely that this provision will apply. At the end of 10 years after issuance of the term loan, the borrowers have a legally prescribed termination right.
Because the expenses can be significant, borrowers should consider the following options: Wrong Cancellation Policy: Many debtors have in the future made use of a misstatement in the term loan loan agreements, which is a valid legal opinion. A wrong revocation offers the borrowers a good basis for negotiating the reduction of the early repayment penalty. Another way to avoid a prepayment penalty would be for the acquirer to take the term loan business when buying a property.
However, this only works if BayernLB has approved the change of debtor. The creditworthiness check also includes expenses which BayernLB will have paid in the form of fees. After the effective date of the termination, the term loan must be repaid within the term of at least 2 calendar weeks. After expiry of the deadlines, the loan is deemed not to have ended.
In general, the most favorable for the borrower regular repayment option is assumed. Therefore, the lender should expect the highest possible contractual repayment. The lender should therefore accept the highest possible contractual repayment. In addition, it can be assumed that all special repayments of the term loan will be fully utilized. From the lost interest income, the lender must settle the income that he would receive for the investment of the assets in the same period.
However, because part of this billing document is negative, it does not necessarily benefit the borrower. If the term loan is terminated properly, no prepayment penalty expenses will be incurred. However, when switching to a new lender, the borrower must raise the applicable mortgage liens.
In the case of assignment of the liens, the cadastre indicates that the liens of the original financing bank have been transferred to the new creditor. A cancellation of a mortgage fee is not sensible for cost reasons. The cancellation of a basic fee is chargeable. Instead of deleting the mortgages, the client may grant a license to cancel or grant or have it issued by the registered donor.
This ensures that the land charges have been closed and are therefore no longer used as collateral. This allows the client to easily reset the mortgages and reuse them at a later date for financing at any time. In principle, the old lender may overstate the workload and associated expenses for changing the loan.
It should be noted that in most cases it is cheaper to rewrite the securities than to cancel a mortgage and re-register. Mortgages can be relatively easily transferred to a new borrower. This results in between 0.1 and 0.2 per cent, depending on the amount of land charge. As part of the rescheduling, the land registry must be reallocated to the new lender.
For this purpose, you authorize the new lender to obtain an assignment of the land charges. This happens then with a notarial contract between the previous and the new lender. Today, in the vast majority of cases, a land charge is registered because it is transferable. If your previous loan is secured by a mortgage, it is not possible to transfer it to a new lender.
Example 1 Term credits end after a 10-year repayment term: A customer has a term loan with a fixed interest rate of 15 years at AdBank. This would no longer be necessary after 12 years, as capital market interest rates have meanwhile dropped further. Thus, the client can terminate his term loan with a term of 6 calendar months in accordance with special tax law § 489 BGB in writing.
The borrower is advised to check the current interest condition using a comparison portal. In addition, he should also ask his previous house bank for a follow-up financing. Then the debtor must consider whether it makes sense to switch to another borrower. A sample letter to you about the end of the term credit: Ladies and gentlemen, according to 489 BGB para. 1 no. 2 there is the right to terminate a loan agreement after 10 years.
In this case, the customer has no special right to terminate the loan agreement. Section 490 BGB (2) sentence 2 no. 2 sets out the requirements for a special termination right. He can prove the loan agreement by a lawyer to verify a false termination instruction. Under certain circumstances, this can lead to a special termination.
Otherwise, the customer has only the third option to conclude a amicable termination of the loan agreement with the house bank. In the event of early repayment, BayernLB will charge the buyer a commitment fee. The early repayment penalty amounts to approx. EUR 39,327 (no unscheduled repayments agreed). As a rule, the termination of the forward loan will not pay off economically. The term credit business of a debtor has a term of 5 years.
For personal reasons, the client wants to sell the property. What is the prepayment penalty? If there is a special option to terminate the sale of the property, BayernLB is nevertheless authorized to charge a prepayment penalty. For example, the prepayment penalty in the example with an effective interest rate of 2 percentage points and no unscheduled repayment options amounts to approximately EUR 8,061. If an additional annual unscheduled repayment of EUR 100,000 has been decided, the early repayment penalty amounts to approximately EUR 6,113.
The amount of early repayment depends on a number of credit factors such as loan amount, effective interest rate, installment amount, time to maturity and special payment options. Based on this information, the house bank determines its lost interest yield. From these, the house bank must settle its risk and material costs. In addition, the principal bank must note that it can invest the capital elsewhere in good time.
Example 4 Rescheduling of a mortgage: A debtor holds a term loan of 200,000 euros from the BANK. The loan is secured by a mortgage in the amount of 200 000 EUR. The loan is terminated on time by the customer after 10 years in order to benefit from a more advantageous follow-up financing with B-Bank.
What can the client do? He authorizes the B-Bank to obtain an assignment of the land charges. The mortgage interest is transferred from their former house bank to their new house bank. Due to the fact that the B-Bank does not request the entire mortgage, a partial cession of 150,000 Euro is recommended.