Anyone planning a mortgage must, among other things, take account of the provisioning interest. What this is and what borrowers need to look for in this regard is answered in the following text.
Deployment Interest: What is it?
Provisioning interest is interest that accrues when only part of a loan amount is called up, ie provided by the bank. To compensate for the interest shortfall, the bank calculates interest that accrues to the amount remaining at the bank. Mostly, this does not happen from the beginning, but only after a predetermined period, which can be a year or more. The conditions vary greatly and there are sometimes big differences with regard to the level of provisioning interest.
An example: The borrower accepts a building loan in the amount of 100,000 euros, but accesses only to 30,000 euros. For the remaining 70,000 euros, monthly provisioning costs are now incurred. These usually amount to about 0.25%, which can quickly add up especially with higher loan amounts. In addition, the usual interest for the already withdrawn 30,000 euros must continue to be paid. To keep track of this, the deployment rates should be calculated in advance.
This calculates the commitment rates
Provisioning rates are an important factor in any construction loan. Accordingly, it is important to clarify all questions in advance and to calculate the accrued interest directly. Ideally, it will be discussed in advance with the bank and contracted as of when the interest accrues and how high they are. Once that is done, the interest is included in the monthly installment.
If you have no experience here, you can have the provisioning interest charged directly by the provider in the effective interest rate. This makes it easier to calculate than with two different interest amounts. The partial payment surcharges must also be taken into account.
Consider partial payment supplements
What also has to be taken into account: any partial payment supplements. These are calculated by the bank once again in addition to the provision interest and the construction interest and accrue at each installment. It is best to choose a bank directly, which waives appropriate surcharges or keeps them at least low. A credit comparison offers itself here, whereby each contract should be presented before the signature to a specialist. The resulting costs are offset by a possible savings and clarity in terms of their own finances, again outweighed. By the way: Most banks let themselves negotiate with regard to the conditions. Who has a cheap offer of the competition has: From the house bank with it. This is particularly useful for larger loan amounts, because even small adjustments in construction and deployment interest can make a big difference.