There are many different situations in which an intermediate loan is needed. In general, a distinction is made between a consumer loan, which is merely a matter of smaller loans, which are for example intended for a new car, a home or a holiday, and a loan for the acquisition of home ownership, a so-called mortgage. An assessment at bbveggie.com
When does an intermediate loan make sense?
In both cases, there is a kind of interim financing in addition to the classic lending. This is required if, for example, a new car is to be purchased, funds are indeed available, but these are not available as liquid funds at the time of purchase. This can either be a security, a classic savings contract or a home savings contract.
Of course, there are other cases in which the maturity can not be determined as day-accurate, then the award of an interim loan is much more complicated. This can be the case, for example, when a house is to be sold and the proceeds are used to repay the bridging loan needed to bridge it. The date of sale is then in most cases not fixed, but can only be estimated.
The procedure for an intermediate loan is similar to a normal loan. In the first step, the bank examines the creditworthiness of borrowers and their ability to service debt. This requires the presentation of proof of income or pensions.
As a rule, it is necessary to be in a permanent employment relationship. A clean credit bureau is the absolute prerequisite for lending to reputable credit institutions. If these steps are taken and, after the establishment of a budget in which monthly revenues are compared with expenditure, there are still sufficient funds left to handle the new credit line of the interim loan, then the interim loan will be extended either as an annuity loan or a bullet loan from the bank Provided.
What to look for?
The requirements of this budget vary from one bank to another, but since March 2016 they have been tightened even further by the residential loan real estate directive (relating to mortgage lending).
In addition to the monthly recurring expenses, under which above all the cost of living plays a major role (this includes costs incurred for basic services: food, drink, electricity, water, gas), rental costs and loan installments are taken into account, as well as larger other monthly expenses.
The cost of living always refers to all persons living in the household and is determined at many banks by the amount of the income of the customer. Because, who earns more money a month usually has a higher standard of living, that is, he spends more money.
An interim loan, however, is often a bullet loan in which only the monthly interest payment is charged during the term and a small part of the monthly additional burden is incurred. After the end of the term, the complete redemption takes place in one sum by the due date of the investment or a donation by another means.
Such interim loans are popular, because it is often difficult to terminate fixed contracts before maturity without losses, especially in insurance, the repurchase value is usually much lower, but also in some types of securities in which an initial charge, that is, a fee charged and there is still a price risk during the term.
Interim loan and building savings
Another aspect that makes the interim loan interesting is the “waiting” for the allocation of a home savings contract. Here, a certain amount (half of the previously agreed home savings amount, but usually at least 40% of it) was saved, which is interest-bearing as savings and in the next step after allocation a home savings loan provided.
5 Tips on Interim Credit
1. Pay attention to interest
An intermediate loan is financed quickly, because it is a form of credit, which is usually paid out very quickly. Just because the money is needed but mostly urgently, the interest rates are driven to like. For example, the interest rates for an intermediate loan are usually much higher than for a regular loan.
Here the customer has to negotiate well. The interest rate should be based on the norms and exceed them only insignificantly. If the interest rate is too high, you should look for another provider. The interim loan does not necessarily have to be financed by your own bank and, on their terms and conditions.
2. Negotiate funds
Often, the funds required to finance a project or property are much higher than planned. In some cases, despite the fact that all the conditions have been met, the bank is not already in the process of financing the entire interim loan.
Here it means staying tough and the bank – especially when it comes to a fully funded Construction loan contract – point out that all obligations have been met. The latter is obliged by legislation to examine conditions according to objective standards.The creditworthiness must be guaranteed, because otherwise the bank can actually refuse.
3. Consider collateral
Although most interim loans are secured through payments already in the room or Construction loan contracts that are due shortly before disbursement, it may nevertheless be necessary for additional hedges to be provided.
For this purpose, various options such as real estate, vehicles or corporate assets are considered. However, these collateral must be fully proven. Especially if the interim loan exceeds the sum of the actual sums of money, it may be necessary to provide additional security for the loan.
This point should be considered in advance, but at the latest when it becomes clear that the requested funds are still not sufficient to finance the project.
4. Submit project planning
If you need an intermediate loan for the first time, you should be able to explain exactly what you are doing. Anyone who needs the money to finance a project should therefore be able to submit a comprehensive project plan. From this should emerge, which means later the project should realize and from which source these are procured.
Only then can a positive decision be made. If there are any irregularities, then the interim loan can also be denied. However, this happens only very rarely. In addition, if sufficient collateral is available, which can also be derived from the planning, there is basically nothing to prevent it from being awarded.
5. Beware of private offers
Interim loans are usually given to companies or people who are planning to buy or build a property. However, there are also offers that promise an intermediate loan to bridge bottlenecks in existing personal loans.
In principle, this is possible, but you should pay close attention to the conditions. Often the interest rates are very high, because the money is usually needed quickly. A circumstance that is quite exploited by some providers.
Anyone who really needs such a loan to bridge their current loan obligations should compare exactly what each provider does and only make a decision if he is really sure. It does not necessarily have to be the house bank that finances it. Cheaper offers can often be found at other banks.