Can a loan be extended automatically?
Yes, a loan can be extended automatically, but only under certain conditions. Background: If the debit interest rate commitment on your real estate loan expires, the bank must inform you in writing three months before this expiry whether it would like to extend the loan agreement with you or not. If she is ready to do so, she will usually submit an offer to you directly and set a deadline within which she will keep this offer. You can then decide whether to accept or reject it. Accept it, roll over. If you reject it, you will need follow-up financing from another bank.
But what happens if the customer does not conclude follow-up financing at all?
If you as a customer do not react to the bank’s offer and do not otherwise take care of follow-up financing, the old loan from your old bank will automatically be continued as a variable loan. This is common practice, but can be expensive for the customer: variable loans have a significantly higher interest rate than annuity loans with fixed interest rates. Banks base their interest rates on variable loans on the reference rate and add about 1-2 percentage points per year as a margin.
If mortgage lending simply continues as a variable loan, the rate can change every three months due to a rising or falling interest rate. If you had a much higher interest rate in previous years, the currently favorable interest rate of the variable loan, which has been adjusted to the current market level, has a positive effect at first: your rate will drop.
Nevertheless, at this moment it is always better to conclude follow-up financing with a fixed rate of interest and not simply to let the building financing continue because you generally drive it even cheaper. From a purely financial point of view, it is in the customer’s best interest to replace the variable loan as soon as possible with a cheaper, safer loan with fixed interest rates.
For this, variable loans – as the name suggests – can be completely replaced at any time with a three-month notice period. This replacement does not incur any additional costs. A prepayment penalty is not charged for variable loans.
Can the bank simply consider one of the offers submitted as accepted if it does not receive an answer?
No, she can’t. Recently, there was a case where a bank made a rollover offer to the customer and told him that if the customer did not respond within a certain period of time, they would consider the offer accepted. When the customer did not respond, the bank continued to finance its construction as if it had accepted the offer. This turned out to be unlawful: The bank should not have regarded the silence of the customer as consent.