Real estate financing. How much credit is possible for us?
With the non-binding construction financing comparison in your own 4 walls
The dream of one’s own home is present with many people, with the help of a real estate financing this should no longer be a dream. But only very few can fulfill this dream right away without any financial support. For all others, the question of financing is at first in the foreground.
How much property can I afford?
Before any real estate financing is the question of the type and size of the property, which in turn usually depends on how much the loan amount. This should be calculated realistically: Face monthly exceptions and exceptions, including not only all fixed costs, but also a small cushion for unpredictable expenses such as a broken washing machine, a broken car or the like. After subtracting these costs from the total revenues, there remains a surplus, which forms the basis for the calculation of the loan amount. Also included is the equity that can be used to build or buy real estate.
Prepare for the bank conversation
Experts recommend that prospective homeowners, after identifying the loan amount, prepare carefully for discussions with the bank employee responsible. Do not forget that the bank – and therefore all its employees – is interested in selling lucrative financial products. However, these do not necessarily have to be the best product for you. But with good preparation, you are well equipped to successfully start the right real estate financing. It is essential to calculate the amount of equity that you would like to use to finance the property. The rule of thumb for most banks is that at least 10% of the loan should be equity backed, but the more there is, the better.
Fixed interest rates for real estate financing
In times of low interest rates, you should press for the favorable interest rate to be fixed for as long as possible, preferably until the end of the loan term. What is beneficial for you as a consumer costs the banks money, which is why they usually do not offer fixed interest rates on their own. Therefore, become active yourself and bring this possibility into play – including your concrete ideas.
Repayment and special repayments
When planning real estate financing, keep in mind the amount of the repayment, ie the portion of the loan installment that reduces the residual debt and is not an interest payment. Basically, the higher the rate of repayment, the faster a loan can be repaid. But always stay realistic and do not run the risk of agreeing to overpayment that you can no longer afford at some point. Regardless, you should be aware that there is a possibility for special repayments. For example, if you have an inheritance, a significantly higher income or a lottery win by changing your employer, you can use a special repayment to repay your loan earlier. Inform yourself about the respective conditions of your bank.