Who does not want a home? The dream of having your own house can be fulfilled with a home loan . You do not have to be a director or manager, but you can also – with the right funding – create or buy a home. But a real estate financing is indeed a big step and must be well thought out. Finally, because of the long maturity, the loan will affect the financial situation over the next few years, if not the next two or three decades. Especially in this day and age it is especially advisable to invest your capital in real estate. This is not only advised by bank employees, but also by financial experts who have realized that real estate not only enhances the quality of life, but also represents a real source of wealth.
Between mortgage and Gandalf – the different financings in detail
Before the borrower applies for a home loan, he should first get an overview of which different types of loans are available. A distinction must be made between home loans and mortgage lending. Home loans are predominantly existing real estate, while mortgages are used to create a home yet to be built. Consumer loans and ordinary installment loans are not alternatives in the context of real estate financing; This is because here the possible loan amount is below the range that is actually needed in the end. Normally, the maximum loan amount for installment loans is 120,000 euros.
The mortgage loan is a classic in real estate financing. The house loan is covered by the mortgage. For a mortgage loan, the interest rate is the decisive factor; this is usually very low, so that the form of financing is perceived as attractive. Also, the fact that the current interest rate is at a historically low level makes many tenants think of realizing the desire to own their home.
If one speaks of a mortgage loan, then at some point the term annuity loan also falls. In this case, the construction loan differs from other loans in that the monthly installments are determined in advance and remain unchanged over the entire repayment period. The rate of the annuity loan is composed of an interest portion and a repayment portion; with each monthly installment the repayment portion increases, while in consequence the interest portion sinks.
Sometimes, it is also possible to make use of Gandalf or so-called forward loans. Full financing – ie financing without equity capital – is also possible. However, such loans are worthwhile only in the fewest cases.
building society credit
In addition to banks, there are also building societies that offer loans for the realization of the home. There is the so-called home loan from an existing contract; In the process, the savings phase of the building society savings contract has already been terminated, or is subsequently entitled to a loan with relatively low interest rates. The Bausparsofortkredit, in which a new contract is concluded, is another alternative. It must first be saved before the contractor can take advantage of the loan. By means of intermediate credit – also known as advances – you can bridge the savings phase, however. Bausparsofortkredite be used if you want to secure low interest rates – over the entire repayment period.
Another, but very rare form of home loan, represents the financing of the insurance loan. In this case, the borrower enters into a life insurance, saves and uses in advance a pre-financing, which is repaid at maturity, by the income of the insurance. However, due to the euro and the financial crisis, this financing is hardly recommendable today. Ultimately, significant costs can weigh on completed contracts; In many cases, the costs are only recognizable after the termination or after the conclusion of the contract. In many cases, the insurance does not reach the desired value, so that the pre-financing can not be fully repaid. It should be noted that many borrowers – due to such financing – had to sell their own home because they could not repay the financing due to the low profit share of the insurance taken out.
Do you need collateral for a home loan?
Of course, the bank also needs security if it sometimes makes amounts in the high five-digit range available. Home loans are usually covered by a life insurance policy. If the borrower dies before repayment of the loan, the insurance pays the outstanding balance. It is advisable if the borrower also already has its own capital, so he does not have to take a Gandalf. The rule that around 20 percent of the purchase price should represent the capital, but is outdated. Due to the fact that there is already full financing, more and more people are deciding not to invest their own capital in buying a home.
Is it worth it to have a loan agreement?
Before the potential borrower chooses to finance, he should conduct a credit comparison. There are various portals on the Internet that give the applicant a relatively good overview of which banks offer good, very good or even bad conditions. The applicant only has to enter his / her relevant data such as the duration, the loan amount or the desired monthly loan installment and will subsequently receive an overview of which banks are available or which offers are available. Of course, there are different parameters to consider. It is important that the borrower pays attention to the overall burden. This can be found under the heading Total credit amount. The borrower immediately recognizes how high the loan amount will actually be at the end of the term.
The checklist – what does the borrower have to consider in the home loan?
There are many tips and tricks on the internet, but which recommendations are actually relevant? The following checklist can be helpful in making the right decision when choosing the home loan:
- Annual percentage rate: The lower, the better, especially with home loans!
- Combination: Are combinations of mortgage loans and home savings loans worthwhile?
- Total effective interest rate: Should be taken into account when buying a combination offer when buying a house!
- Costs: Processing fees are possible and should be discussed or negotiated in advance
- Fixed interest: If the borrower observes rising trends or the interest rate is getting higher and higher, one should opt for a long interest rate; in the opposite case, it is advisable to obtain short fixed interest periods
- Special repayments: special repayments must be specified in the contract; Only then can the borrower make “special payments” and repay the home loan early
- Prepayment Compensation: Is also regulated in the contract; the borrower should – as best as possible – avoid!
- Credit comparison: If the borrower compares the different offers of the bank, he can up to four-digit amounts – per year! – save.