The repayment repayment, or as often mentioned the repayment suspension, is a term that is primarily associated with mortgage lending. The fixed mortgage sometimes appears as a term. Whatever the name may be, this type of financing differs significantly from the annuity loan.
During the repayment suspension, only the interest on the loan amount will be paid during the entire term. A direct repayment does not take place. Of course it is possible for any type of loan to suspend the repayment. However, this does not mean an interruption of the installment payment for a small period of time, because there is a shortage of money, for example. What else is meant by this, you will learn in the following.
Borrowers have various ways to repay a loan. It can be repaid continuously, and then it is a beard restoration. However, if the loan or loan is not repaid with current installments until the end of a fixed term, there may be a repayment suspension. In the area of mortgage lending, this could mean:
If a repayment suspension is chosen for financing, then only the interest accrues over the entire period of financing. A repayment does not take place at all, and the remaining debt or rather initial debt remains the same over the entire term. Of course, no one in the distant future will make the repayment from the petty cash. This means that any amounts that would actually be received by the lender will drip into another pot so that they are available for repayment at maturity. In addition to the interest, a contribution X is thus invested in the repayment installment. After the agreed term of the loan and repayment, the loan is repaid from the saved benefits. Then the borrower is debt free.
How could such a pot look like that would catch the guesswork?
This could be a capital-forming life insurance or annuity insurance with a capital option. The unit-linked life insurance, a (as safe as possible) investment funds and Bauspar contracts are also suitable.
By the installment in a (for example) life insurance is already defined exactly at the beginning, when the loan comes to an end, which is not the case with a financing as Annuittendarlehen. The annuity loan is always only for a certain time an interest fixed, which is renegotiated after expiration of the contract, perhaps even with another provider. But not only the term fits in the life insurance to the month exactly, the contributions remain unchanged. In the case of an annuity loan, however, they decrease.
A considerable advantage is the fact that, in the case of life insurance as a premium product, the payments on the death of the insured person come to a standstill and thus provide a fatality cover. With the payment from life insurance, the loan can then be repaid early. Financial problems for the bereaved are therefore not an issue. The amount of the installments to be paid can even be reduced by juggling, because if the life insurance is extended to the lives of children, the contributions are lower than for older people.
For whom is the amortization replacement particularly suitable?
Self-users who want to protect their family at the same time, will certainly use a life insurance as a repayment. This saves an additional risk life insurance to cover the residual debt. Investors and investment in commercial property can also be mentioned here, since this group can claim the same interest for tax purposes. The tax benefits improve the return. Redemption suspension may also be useful for leased property.
When choosing the repayment suspension, the following must be observed: In order to ensure the repayment of the loan at the end of the loan term, life insurances should be calculated with the guaranteed insured sum. On the other hand, if the bank calculates with an anticipated expiry performance including profit participation, the full repayment is not secured at the end of the term. If the expected maturity payment of the life insurance including profit shares (profit participation) is not reached, a credit institution may demand special repayments in view of a financing gap that has arisen. It certainly needs little explanation that the choice of mutual fund is not a safe bet, since there is no set expiry date. At most with the Bauspar contract can still be counted as a fixed number.
Life insurers bring yet another advantage to the race: the insurance companies offer their money for home loans usually offer something cheaper than other lenders. On average, these interest rates are approx. 0.5 percent below the usual banking conditions. A disadvantage can affect that insurance companies set a very low mortgage lending limit – about 40 to 50 percent of the mortgage lending value. Lack of money must therefore be procured by other lenders as a subordinated loan. However, this subordinate status costs extra in the form of an