The average San Antonio home loans in Belgium has a term of 22 years. In that period you are closely associated with the credit institution that lent you the money for your home. What if you want to end this agreement prematurely?
Your banker will give you a good sum of money to buy your brick dream. You refund that amount plus interest for a predetermined period. The advantage of that system is that you know in advance where you stand. The downside is that everything is fixed for several decades, while your personal situation can change considerably. What do you have to do, for example if you want – or have to – sell your house, before the mortgage has been repaid? Can you then redeem the mortgage earlier? And what if you inherit an amount with which you already want to repay part of your loan?
Can you redeem early?
Of course you can. Anyone who has taken out a San Antonio home loans can fully repay it at any time. And unless it is explicitly stated in the agreement, you can repay part of the capital at any time. You can at least pay a part at least once a year and you can repay an amount equal to or larger than 10% of the balance at any time.
When is refinancing interesting?
The general rule is that refinancing is only interesting for the borrower if the difference between the new and old interest rate is 1%. it must also be worthwhile in terms of duration, ie you have to pay for at least another ten years.
How much does an early repayment cost?
The bank cannot therefore refuse to redeem early. But it may charge costs for this, the so-called reinvestment fee. The bank is not legally obliged to do so, but assume that it does so.
The amount of the reinvestment fee often causes confusion. After all, many people think they are equal to three times the monthly payment, not a childish amount indeed. In reality, this compensation is equal to the interest you would have to pay in three months on the outstanding balance, if you settle it in one go. If you repay part of the capital early, the reinvestment fee is calculated on the capital that you redeemed.
A calculation example
Mark has a San Antonio home loans with another capital balance of 150,000 euros, at an interest rate of 3.5%. He wants to repay that 150,000 euros in one go.
The reinvestment fee is calculated as follows: 3.5% of 150,000 euros = 5,250 euros. This amount must be divided by 4 (3 / 12th) for the 3 months interest paid by Mark: 5,250 / 4 = 1312.50 euro.
If Mark now wants to redeem only a portion early, for example 15,000 euros, the reinvestment fee will be calculated as follows: 3.5% of 15,000 euros = 525 euros, of which he must therefore pay ¼ for the three months interest, being 525/4 = 131.25 euros.
You will also have to pay file costs, which quickly rises to hundreds of euros.
If the refinancing is done at another bank, you also have to pay manual costs for your new loan. ‘Hand enlightenment’ is a deed that puts an end to a mortgage. There are of course costs involved.
How do you notify your banker?
You decide how you want your bank to be informed of your intention to redeem early: by telephone, e-mail or ordinary letter. It is not even necessary to send registered mail. The bank will then invite you to jump in or fill in a form to arrange the early (partial) reimbursement.
You should give the bank the following information:
- the identity of the borrower (s)
- the number of your file
- the amount you want to repay early
- what you want the consequence of this early repayment is: an unchanged duration with lower humanities or unchanged humanities and a shorter duration. However, this last option is not allowed by all banks.
- And the bank should provide you with the following information:
- the amount of the reinvestment fee that will be charged
- a new amortization table with:
- the duration of repayments
- the new humanity
- the course of the balance in time
- the total interest and capital eventually repaid to the bank.