Home loan: comparison, cheap interest and calculator.
“You can’t buy property without equity.”
If you want to build or buy a house, you should normally include at least 20 percent of the purchase price as equity in the financing. The background to this is that the bank only takes the property into account as loan collateral in the amount of the so-called mortgage lending value. This is between about 70 and 90 percent of the purchase price.
Nevertheless, there is the possibility to buy a house without equity. There are now some financial service providers on the market that offer so-called full financing. With this type of home loan, the lender assumes 100 percent of the purchase price. Builders and home buyers who want to realize their dream of owning their own home without equity should have a solid and reliable income. In such a case, the borrowing rate is usually higher. Also keep in mind that the additional costs are usually not covered by full financing. Therefore at least these are to be paid out of one’s own pocket.
“Thanks to the low construction interest, everyone can afford a house.”
It is undisputed: the general market interest rates and thus also the building money are at a historically low level. Many who are currently taking out a loan for a house can therefore look forward to extremely favorable terms. Anyone who has an attractive property in view can therefore move into their own four walls promptly with the help of inexpensive real estate financing.
But not least because of the cheap building money, the demand for a home has increased significantly in recent years. As a result, property prices have risen – in many metropolitan areas there have been significant price increases. Therefore, prospective buyers should carefully check whether they can actually afford the property they are looking for and undertake careful budget planning.
“The higher the loan rate, the faster the loan is paid off.”
If you pay high installments every month, you will be debt-free faster – this statement is only partially correct. In the case of an annuity loan, the credit installment consists of an interest and a redemption component. To settle the debt as quickly as possible, the only thing that matters is the amount of the repayments. As a result, the Advisers advise choosing an initial redemption of at least 2 percent. Because the rule is: the higher the repayments, the shorter the loan term and the lower the interest costs for the loan taken out.
“As soon as I find a property, I should quickly secure financing.”
Many people who have found the right house after a long search often want to act immediately. The choice of a suitable loan is secondary for some home buyers and home builders. This can take revenge, because there are numerous banks and financial service providers on the market that offer differently attractive home loans. It is therefore best to hire a adviser specialist to prepare a free and individual financing proposal. Because with a loan that is perfectly tailored to your needs, you save cash and avoid later problems.
“The price of the property plus 5 percent gives the loan amount required.”
If you want to buy a house, you don’t just have to pay the price of the property. The additional costs are also incurred for a purchase. The notary, land register and brokerage fees as well as the real estate transfer tax amount to around 10 to 15 percent of the purchase price. You usually have to pay this amount yourself, as the additional costs are usually not covered by the financing.
“The term of the loan should be kept as short as possible.”
If you take out an annuity loan, you will be guaranteed a certain debit interest rate for the duration of the agreed rate fixation. The borrower is generally bound to the contract entered into for this period. Since the financial situation and general living conditions can change, some borrowers prefer to opt for a shorter rate fixation. Because they want to keep a certain flexibility.
Especially in the current situation, this approach has to be critically examined. Since construction rates are currently very low, the adviser experts generally recommend longer interest rates. In addition, even borrowers with a longer fixed interest rate do not have to worry about contract terms being too long. Because as soon as 10 years have passed after the loan has been paid out, you can properly terminate your credit contract in accordance with Section 489 of the German Civil Code (BGB). In this way, you then have the opportunity to conclude cheaper follow-up financing at no additional cost.