What to consider if the loan is to be increased
- Increase the loan amount retrospectively
- Talk to the lending bank
- Another bank
- Tips and hints
Increase the loan amount retrospectivel
You have taken out a loan for a certain amount and find out during the payment that you simply need more financial leeway. Especially when it comes to real estate financing, the problem arises due to unexpected additional costs in the construction or renovation project. We would like to give you possibilities, solutions and tips for increasing a loan or loan.
As with any new loan, you should of course first ask yourself whether you can possibly lower the claims or whether there really is no alternative to increasing the loan . Especially if the financing is already very tight and the monthly charge is hardly bearable, you should consider baking smaller bread rolls or restricting yourself elsewhere. Greater personal freedom is usually more valuable than anything else. Even if the current financing is not completely sewn on the edge, one should always plan enough reserves so as not to overindulge in the event of unforeseen events or changes in living conditions.
The main question is: how much credit can I afford?
Talk to the lending bank
If the decision is made or is unavoidable, you should contact the bank where the loan is running to find a solution. In general, banks are of course open to additional business if the conditions are right. In general, an increase in credit is also easier and faster to achieve than you think and is also known from lending. After all, the bank knows you and your financial situation and only requests an update of the documents when the time has passed.
In most cases, a new loan agreement is created based on the new capital requirement, which replaces the previous one and of course means higher monthly installments. A subsequent change based on the previous conditions is very rare.
Only if your own bank is not ready to increase the loan or only offers it at unacceptable terms, should you look for another financing partner for the increase. In principle, two or more parallel loans from different institutions are also possible – the only question is how much credit you can afford.
Ideally, the alternative lender also offers an offer for cheap debt restructuring.
Here you have to use the offers to work out whether the bottom line is significantly cheaper. If you inform yourself at your previous bank about a termination and also the amount of the prepayment penalty, this may make a better offer with more attractive interest rates due to the impending loss of the customer. A little bit of negotiation skills and, of course, self-confidence cannot harm the conversation.
Tips and hints
- Even if the loan amount is increased subsequently, the bank has to find out about the customer’s creditworthiness. As a result, a new request will be made to a credit agency (in most cases, the Credit Bureau). If new negative features have been added since the loan was taken out, which seriously deteriorate the creditworthiness, the application for an increase will probably be rejected or the credit conditions of the new loan will be worse and the rates will be even higher.
- It is best to get a corresponding private Credit Bureau information beforehand. Even if you are not aware of any guilt, there may be false negative features without your knowledge, which you should defend yourself against.
- In the case of fixed interest on the first loan, an increase is more complicated and only worthwhile if the interest rate valid at the time of conclusion is still attractive.
- If you have completed your loan online, you should check whether the provider does not already offer an online option for increasing. Here you can usually conveniently determine the new conditions using a slider. Of course, also subject to a newly requested credit report.
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