The currently prevailing low interest rate quickly tempts to hasty conclusion of a construction loan. Sure, owning your own home is a dream that is well worth striving for, but still, you shouldn't rush into it. Because there are many mistakes that borrowers make again and again.
Tip 1: Avoid miscalculations of the financial burden
It's not just the contractor who wants to get paid. There are many other costs to the homebuilder such as land transfer tax, realtor and notary fees, insurance, home connection costs, land surveying, etc. At the same time, current housing often requires paying rents, electricity costs, etc. Are raised. Also, the cost of living and evtl. Reserves for any car repairs, vacations or other purchases must be taken into account in the calculation.
Because of this, thorough planning and a detailed look at finances are essential. As a guide, the cold rent can be used. If in the end an amount in the amount of the cold rent remains, which can be used to repay the loan, nothing should stand in the way of a construction financing.
Tip 2: Planning is half the battle
Construction financing must always be tailored to the borrower's individual needs. There are too many variable factors such as the amount of equity, regular income or even family planning. Experts recommend obtaining non-bank quotes. The free-to-use home loan calculators only provide an initial overview of rates, interest rates, etc.
Tip 3: The higher the equity, the cheaper the house will be
Who can bring equity capital into the building project must take a smaller loan up. A lower loan amount also means less interest to be paid. Low rates and low interest rates tempt you to take out a construction loan without having sufficient equity capital at your disposal. Due to the high loan amount, the financing will be significantly more expensive.
Tip 4: agree on an appropriate repayment rate
At first glance, a low repayment rate seems extremely attractive. However, it turns out that the term is then but also correspondingly long, sometimes more than 50 years. Who agrees on a higher redemption rate is faster finished with the repayments. Especially in times of low interest rates, it is best to increase the repayment rate.
Tip 5: Avoid misjudgement of your own payments
Particularly fatal are misjudgements of the own work on the building. Builders always want money through sog. Own contributions save, but often miscalculate. Mostly the appropriate know-how or simply the time is missing. Health restrictions also often play a major role. Therefore often then nevertheless the professionals must ran. However, these costs were then not included in the calculation and the entire financing plan goes over the Jordan River.