Your own four walls are still the epitome of individual provision for many people. Finally, you save with a home rental payments and must be in the age of rising housing costs no more worry. In order to finance your own house, however, a mortgage financing is usually necessary – regardless of whether you want to build or buy an existing property.
Plan your mortgage lending
A building loan is not only taken over a larger sum of money but usually runs over a very long period. Finally, the monthly repayment installments must not exceed their own financial resources. Since during the repayment phase, however, the living conditions can also change, it is advisable to pay attention not only to favorable interest rates but also to a flexible design of the loan agreement when choosing the correct mortgage lending. In addition, it should be examined whether there may be a claim for public funding or how much equity can be raised for the loan.
The higher the equity capital that is applied at the beginning of a mortgage, the cheaper is usually the construction loan. On the other hand, home equity financing without equity is very expensive. Therefore it is worthwhile to save capital already sometime before the house construction is to begin at all or a house purchase is considered. With a Bauspar contract, the savings and the future building loan can be linked together, you remain flexible with other forms of investment. Because in order to terminate a home savings contract, you have to observe notice periods of three to six months. On the other hand, in addition to the normal contract fees at termination, a prepayment fee must also be paid, which reduces the assets saved. Especially for people who want to have their capital in case of need, a Bauspar contract can be too inflexible.
A small lottery win, a bonus payment or an inheritance – who unexpectedly comes to additional money, not infrequently want to settle a current loan. Therefore, arrange a special repayment, so that in such a case no additional charges arise through a prepayment penalty.
Promotion of mortgage lending
For the construction or purchase of real estate, there are numerous support programs from both the states and the municipalities. Depending on the program, certain conditions must be met for such funding. For example, the grant application is based on family size, income and the extent and nature of the construction project or new construction. For example, those who have acquired a building monument and refurbish it have to adhere to strict guidelines, but can generally benefit from a particularly high level of funding. A favorable loan from the Kreditanstalt für Wiederaufbau (KfW) is also one of the possible promotional measures. In order not to give away anything here, the eligibility of your own project should be scrutinized.
interest during construction
Especially in the currently very low-interest-rate environment, construction loans are very cheap. However, even small interest rate differentials due to the length of mortgage lending can have a significant impact on the actual cost of the loan. The various bids should, therefore, be compared both in terms of interest rates and interest rates. For example, a construction loan with a very low-interest-rate can end up being expensive, since only a short fixed-interest period has been agreed and interest rates are increased in a timely manner. However, another loan proves to be cheaper, despite a slightly higher interest rate, as the credit institution guarantees this interest rate for a period of, say, eight or ten years. Furthermore, one should note before concluding a loan, which other fees are incurred, which are not included in the interest. These may be, for example, provisioning fees for mortgage lending.
Also considers the time after the interest rate fixing. Those who calculate very closely with regard to monthly installments may find themselves in financial difficulties when interest rate fixation ends and the bank raises interest rates. Because this results in higher rates for the repayment of your mortgage.
Term and monthly repayment
Due to the high amount of loans compared to small loans, the term must be planned precisely in the case of mortgage lending. Depending on the period you want to pay back the construction loan, the number of monthly installments will be canceled. The term should be kept as short as possible, because the longer the term, the more interest accrues. However, you should also consider that you can easily handle the monthly repayment installments. Otherwise, a short-term can lead to an excessive monthly burden. Therefore, calculate how high the monthly charge may be. It is important to remember that although you do not have to pay rent in the new home, you will incur other expenses. With a mortgage calculator, you can check how a longer or shorter term affects the monthly installments for the desired loan amount- GAD Capital.
This means financial test 04/2012:
Despite rising real estate prices, home builders and home buyers today spend much less on their own four walls than a few years ago. […] Interest rates were never so low, never was the offer so varied.
Benefit from follow-up financing from low-interest rates
For all people who have been paying off a loan or a loan for quite some time, follow-up financing can be worthwhile right now. At the moment, the general level of interest rates is very low, while older construction loans and other loans still have very high-interest rates. With a follow-up financing, you can thus partially save several thousand euros on your real estate loan. For this, your old credit is simply replaced by a new one. As interest rates are lower until full repayment, the overall burden of the loan is lower overall. A comparison of the current financing offers with a home loan calculator or by an expert is well worth it.
Design the optimal mortgage lending
With a construction financing calculator, you can compare the construction interest, planned term and any additional costs incurred. However, to find a loan that best suits your personal needs requires further planning and advice from an expert. In any case, before reviewing the various offers and comparing them with a mortgage calculator, it is advisable to create a checklist with the most important mortgage requirements, such as:
- Interest amount and term
- fixed interest rate
- Possibility for later follow-up financing