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When it comes to renovation loans or adjusting your current loan, careful calculation is essential to avoid potential higher costs. This article provides an overview of the process of increasing a loan, focusing on the steps involved, the role of various financial institutions, and factors that can influence loan approval.
Increasing a loan typically involves submitting an application, which includes proof of creditworthiness and, if applicable, collateral details. Banks, such as Targo, ING, and savings or cooperative banks in Germany, assess the borrower's creditworthiness and the purpose of the additional funds by verifying income, existing financial obligations, credit score (often via SCHUFA), and possibly the value of any collateral.
The process requires the presentation and verification of necessary documents, and it may take longer if the loan is secured by property, as the bank needs to assess property details and valuation. Banks review current lending policies and credit standards, which depend on various factors like overall market conditions, credit quality, and regulatory capital requirements.
In recent periods, banks have tightened credit standards, particularly in real estate, which can affect loan increase approvals. However, cooperative and savings banks may offer more flexibility depending on the customer relationship and local market conditions. All banks, though, operate within regulatory frameworks that include capital buffers to ensure stability, which indirectly impacts how much credit can be extended or increased at any time.
Online applications for loan increases are possible at banks like Targo and ING, while savings banks and cooperative banks may require an appointment. Targobank offers a special online form for increasing a Targobank loan, with the bank collecting all necessary information and showing if the request is likely to be approved.
Refinancing is another option to benefit from low interest rates or adjust loan amounts, especially with long terms. In classic refinancing, a new loan is taken out, and the old loans are fully repaid with the money. Refinancing can also be used to increase a loan by taking out a higher loan amount than you still owe on your old loans.
A payment pause is another indirect way to extend a loan, allowing you to suspend one or more loan installments or only pay the interest for a period. Some traditional banks offer online applications for increasing a loan, but personal requests may be necessary in some cases.
Before increasing a loan, it is important to check for any negative entries in the SCHUFA report, as they can lead to direct rejection. Ideally, when increasing a loan, one should have a secure financial situation, no conspicuous SCHUFA entries, and collateral or guarantors. If consolidation or follow-up financing is pending, it is easier to increase a loan.
ING Bank offers an online process for increasing an existing ING loan, with the interest rate for the increase being independent of the old loan's interest rate. Not every bank offers the option to increase an existing loan, and banks often refuse to increase loans recently taken out.
In summary, increasing a loan involves submitting an application including proof of creditworthiness and, if applicable, collateral details, after which the bank evaluates risks and market conditions to decide whether and on what terms to grant the increase. It is always recommended to inquire beforehand about the specific requirements and processes of the chosen financial institution.
When considering an increase in personal-finance matters, such as increasing a loan, you can apply online through banks like Targo and ING, or visit savings or cooperative banks in Germany for a personal request. It's crucial to have a secure financial situation, no conspicuous SCHUFA entries, and possibly, collateral or guarantors before making the application. For instance, ING Bank provides an independent interest rate for the increase in an existing ING loan via an online process.
