Follow-up financing is an important component in the realization of real estate projects. However, right now, in 2022, it offers another opportunity: it can serve as a tool to optimize wealth accumulation. Experts advise thinking about how to take advantage of the potential for follow-up funding early in the process.
Follow-up financing is a financing instrument in which a real estate financing, which expires at the end of the fixed interest rate, is replaced by a new one. It often makes sense to use this opportunity to optimize financing and thereby build up assets over the long term. The aim here is to adjust the terms and maturities of the new financing to the current financial situation and, if necessary, to increase the repayment installments.
With the follow-up financing one can save thus not only with the interest, but also with the capital accumulation. How exactly this works and which aspects should be taken into account when planning, you will learn in this article.
Why you should think about wealth building in 2022
2022 could be a crucial year for property owners thinking about wealth accumulation. Follow-up financing becomes a challenge when the fixed interest rate expires. The interest rate hike that looms due to inflation can lead to higher costs. Therefore, it is important to think about follow-up financing early on and develop a strategy to continue building wealth.
Repayment is an important aspect of follow-on financing. A higher repayment rate allows you to pay it off more quickly, thus easing the strain on your finances. It is advisable to increase the redemption rate already in the lead time to have a larger financial leeway. Increasing the repayment rate can also help to shorten the loan term.
Another way to help build wealth is to invest in rental property. The rental market will remain stable in the future and can offer attractive returns. Rental income not only supports the financing of the property, but also generates additional income. However, careful selection of location and properties is essential to ensure the success of the investment.
- Think about your follow-up financing and the associated costs
- Increase the repayment rate to become debt-free more quickly
- Invest in rental real estate to help build wealth