The adjustment of conditions for follow-up financing


In the Condition adjustment respectively. Adjustment of conditions In the case of loans, the conditions for the loan are redefined between the borrower and the lender. The reason for an adjustment of the conditions is the expiry of the fixed interest period. As the old loan expires, the conditions of the follow-up financing must be agreed anew.

The fixed-interest period is usually shorter than the fixed-interest period. Term of the credit. As conditions on the capital market are constantly changing, the conditions for follow-up financing must therefore also be adjusted. An adjustment of conditions can mean an increase or decrease in the interest rate over the next fixed-rate period. Since the loan has already been partially repaid at the time of follow-up financing, there is often sufficient money available to make repayments over a Repayment rate change directly as well.

fixed rate

The fixed interest period is the period for which the terms of a loan are fixed. However, since the fixed interest period often ends before the term of the construction financing expires, a new determination of the credit conditions is necessary.


Adjustment of conditions: Procedure

The lending bank makes an offer for follow-up financing a few weeks before the fixed interest period expires. This offer is based on the current conditions on the capital market. This means that interest rates may be higher or lower than in the current interest period. As a borrower, you should try to negotiate this offer. One mistake that is often made here is that no alternative offer of another construction financing can be presented when negotiating with the bank.

In addition, the borrower should proactive seek contact with the borrower's own bank and other banks to arrange a discussion about follow-up financing. Finally, the borrower needs some time to obtain further offers from other banks if necessary.

Condition adjustment for insurances

In addition to condition adjustment in construction financing, the term condition adjustment is also used for Insurances used. An adjustment of conditions in insurance is necessary if the legislator declares conditions of an insurance contract invalid. The insurance company must then adjust the relevant clauses and take appropriate account of the policyholder's concerns. An insurance company may also not place policyholders in a worse position through a downstream adjustment of conditions than when the insurance was concluded. In this regard, there is a good example at Haufe:

Example of impermissible condition adjustment for insurance policies

The legal protection insurance company wants to change the conditions with reference to a condition in the ARB (e.g. § 10a ARB 94/2000). The aforementioned provision provides for the possibility of changing the conditions.

margin note 53

The condition adjustment clause of § 10a ARB 94/2000 has been declared invalid by a ruling of the Federal Court of Justice. According to this ruling, a condition adjustment clause by which the insurer reserves the right to place the policyholder in a worse position after conclusion of the contract than he was in after conclusion of the contract by amending the agreed GCI is unreasonably disadvantageous to the policyholder and is therefore invalid. According to this, the amendment requirement was justified due to the general wording, namely the wording: "To eliminate doubts of interpretation".

Excerpt from: "The systematics of condition adjustment" - Publisher: Haufe

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