Borrowing at low interest, how do you do that smartly?

If you are going to take out a loan, you will of course do so at a low interest rate. To borrow money smartly, quickly and cheaply, you must also keep a close eye on your existing loans and take action quickly. Refinancing old loans also often offers a solution. This way you can save yourself a lot of money. Applying for another loan online is easy.

Low interest rates when borrowing

Borrowing at a low interest rate means looking for the lender who has a great offer for you. The interest rate will also be lower the higher your creditworthiness is. Thirdly, with a mortgage there is of course the mortgage interest deduction, which significantly reduces your net interest payable.

Take out a cheap loan

Before you take out a loan, you naturally request several quotes and take out the loan or mortgage at the lowest interest rate and the most favorable conditions. And then the papers usually disappear into the drawer. That is, you don’t look at it again until the loan is fully paid off. And that is a shame for your wallet, because it is always worthwhile to see whether you can borrow cheaper elsewhere. Your own bank will make a new offer if the loan needs to be renewed, but of course you do not have to wait for that. The Internet provides almost immediate insight into the current interest rate, which may differ considerably from the interest rate you pay now. Transferring a loan, as it is called, often pays off. Let’s look at a few examples.

Transfer a savings mortgage from another bank

Transferring a savings mortgage usually makes no sense, because the system of the savings mortgage means that a different interest rate has little or no influence on your monthly costs. This is because the interest on the mortgage is usually the same as the interest on the savings part of the mortgage. If the interest rate goes down, you will pay less mortgage interest, but you will also receive less savings interest. The premium on the savings insurance still changes, but on balance it is fairly stable if the changes in interest are not that large. De Hypotheker currently offers a savings mortgage where the interest on the savings part is slightly higher than the mortgage interest, but here too switching is only appropriate if there are larger interest rate differences. After all, switching also means new appraisal costs and notary costs that you still have to recoup.

Refinance a mortgage or other credit

If you want to refinance a mortgage before the due date, you usually have to pay a penalty interest. Depending on the start date of your mortgage, the calculation of the penalty interest is based on a complicated formula. The core of the formula is that the bank wants to recover the lost future mortgage interest from you. Depending on the interest rate and the remaining term of the mortgage, the penalty interest can amount to many thousands of euros. An advantage is that you can deduct the penalty interest from your income tax as mortgage interest, so that the tax authorities help pay for the refinancing of the mortgage. If the remaining term is almost zero, the penalty interest will also be very low. In that case, switching to another provider with a lower interest rate is almost always cheaper than staying with the existing lender or mortgage bank. In other words, transferring a loan regularly provides many advantages.

Merge and transfer loans

Having multiple loans is common. People often keep an existing loan and then borrow something else elsewhere. But it may be interesting for credit providers to combine your loans and provide additional credit on top of that. This is interesting for you if the new interest on the combined loan is lower than the old interest and you want to borrow additional money. The advantage is also that you have a better idea of what you have to pay for and what.

Calculation example of benefit of merging loans

Suppose you have three loans. You have a revolving credit of 8,000 euros at 8 percent interest, a personal loan of 7,000 euros at 7 percent interest is 500 euros in the red at 15 percent interest. Then you pay 1,205 euros in interest on an amount of 15,500 euros without repayment. That is an average interest rate of almost 7.8 percent. That is the same as a loan elsewhere of 17,250 euros at 7 percent interest.

How high is the interest I pay for my loan?

The amount of interest depends on many factors. I’ll mention a few:

  • Is it a fixed or variable interest rate?
  • Is it a promotional interest or not?
  • What is the amount you borrow?
  • What term of the loan do you want?
  • Is it with collateral, such as a mortgage or not?
  • Do you have a negative BKR registration or coding and what does your personal situation look like?
  • What is the tightness in the money market?

Borrow at lower interest rates

When transferring, you should not only look at the interest rate, but also at the term and whether the interest rate is a fixed interest rate or a variable interest rate. Look, it’s not much use to you if you have to deal with a promotional interest rate for a few months. You naturally want to refinance at a low interest rate that will last for a while and not an interest rate that could soon be even higher than what you pay now. Therefore, make clear agreements about this. Furthermore, you should not take out unnecessary insurance. The insurance is expensive and usually takes away the advantage of refinancing the loan. If the lender says there is no other option, you simply have to request a new quote elsewhere.

Calculate loan or mortgage online

Calculate via the internet what your options are for a loan, how much you can borrow and up to what amount. Borrow at a lower interest rate.

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