Not all construction loans are the same. Even in times of low interest rates, customers should not forego the most accurate possible comparison of providers and offers for real estate financing. Construction financing is a very long-term contract whose term can extend over several decades. So it's not something you can just do on the side, even if interest rates are at an all-time low.
Interest rates on a downward slide
The ongoing financial and debt crisis also has its good sides. This applies at least to prospective builders and their house financing. Due to the low key interest rates of the European Central Bank, mortgage interest rates are still at a level of around 3% based on a term of 10 years. Financing of less than 50% of the total investment amount even settles well below this mark for the same term. This is the best way to start building or purchasing a home as soon as possible.
Well bound – much saved
Particularly important in such times are as long as possible fixed interest periods. Loans with 15 years term can be requested already with interest rates of only little more than 3%. This not only grants builders comparatively favorable construction financing, but also a high degree of planning and calculation security with regard to their own budget. For comparison: Who decided in the middle of the 90's for a real estate financing, was allowed to rake up still up to three times the value of interest with these running times. Also still longer terms of up to 20 years can be worthwhile at present still. And despite the binding to the debit interest rate, it is still possible to cancel the construction loan after the 10. Year with six-month period of notice in whole or in part to terminate. High interest phases can be avoided thus in view of the follow-up financing in this way skillfully. Either a more favorable interest rate is found or it is financed evenly with the old one further.
On this should be paid attention also with comparisons for the house financing, because only relatively few offerers offer Zinsbindungsfristen of 15 to 20 years. However, the interest rate itself should not be lost sight of, because the differences can be up to 1% from provider to provider. What may seem little at first, adds up to considerable sums over the years. Over a term of 15 years and with a loan amount of 100.000 euros can make choosing the right provider 15.000 to 20.000 euros in savings.
Real estate credit – also on the Tiilgung pay attention
The move into your own four walls leads in most cases via a real estate loan. When comparing, builders and real estate buyers primarily pay attention to the APR and overlook the amount of repayment. However, this has a direct impact on the length of the term and should therefore be taken into consideration.
Compare real estate loans correctly
Anyone comparing several financing offers should always include the amount of repayment in the comparison. Who compares only the effective annual interest as well as the height of the monthly rate, which receives thereby no information about the real quality of a credit offer. Thus, the possibility of unscheduled repayments is often stipulated in a home loan, but not the chance to change the repayment percentage during the term of the loan. This is primarily due to the fact that the repayment portion automatically increases with an annuity loan with continuous repayment, while the interest portion is reduced accordingly. The higher the repayment portion is selected at the beginning of the construction loan, the faster the real estate loan is paid off, without taking into account unscheduled repayments. So if you want to be debt-free faster, you need to set a correspondingly high repayment rate. Provided, of course, that this fits into the financial framework of the financing. With an interest rate of 5 percent and a repayment of 2 percent, the loan will be paid off after about 25 years. If an amortization rate of 3 percent is selected, then one is debt-free after only about 19 years.
The thing with unscheduled repayments
If there is the possibility of special repayments, then this should be used in each case also. The prerequisite for this is, of course, that this option was agreed with the bank when the loan was taken out. Most banks offer unscheduled repayments of between 5 and 10 percent of the loan amount. For example, an inheritance or a maturing savings contract can be used to reduce the loan debt. Although this does not lead to a reduction in the monthly installments, the loan is repaid sooner instead. Before borrowers decide to make an unscheduled repayment, it is worth comparing the return options for financial investments. Unscheduled repayment is especially worthwhile when interest rates on the construction loan are higher than a potential return on investing the amount available for repayment. Because it makes little sense to invest money for an interest rate of 3.5 percent, while at the same time paying 4.5 percent interest on your real estate loan. In addition, some banks require a surcharge at the conclusion of the loan, in the event that an option for unscheduled repayments is agreed in the loan agreement. If this is not claimed, the premium was paid in vain.
The desire to own your own home can quickly become a reality these days. Even though construction financing is a large investment, you can make significant savings of several thousand dollars by comparing construction loan interest rates.
Find favorable house financing by a comparison
Rarely can builders provide the financial resources in one sum for the construction or. Raise the purchase of the property and are thus dependent on home financing. Particularly good conditions for your home financing can now be found on the Internet. Here can be objectively and quickly comparisons to the different offers not only create, but also retrieve, so that you are spared a time-consuming search. Beyond that not rarely the costs are substantially lower for a construction financing in the Internet.
If you have found out the necessary key data such as the loan amount, the term, flexibility options and repayment rate according to your personal assets and income, you should start an inquiry to preferably several lenders. The more details you provide when inquiring about your desired real estate loan, the easier it will be for you to compare building loans.
As a rule, the so-called direct banks offer far better conditions compared to the traditional house bank because online banks have neither a branch network nor expensive customer service representatives. Because one aspect that should not be underestimated is the small differences, whether in the possibility of unscheduled repayment or the interest rates, which ultimately make themselves felt in the overall financial burden. And this in turn results from the relatively high loan amount and the often long terms, which can be between 5 and 30 years.
The credit forms of the house financing
If you as a borrower would like to have as secure a plan as possible, then you should prefer an annuity loan with a fixed debit interest rate, in which you always repay consistently high installments over a certain term. Another and very often used form of financing is the building society loan, the financing by means of an annuity or a pension plan. Life insurance as well as the financing protection letter. If you would also like to protect your family from financial consequences in the event of an unforeseen event, you should take out an additional life insurance policy, or at least term life insurance.
Real estate financing
The building interest rates are extremely attractive in view of the historical interest rate lows. Therefore, long-term loans can currently be concluded at extremely favorable interest rates, which have relatively long fixed interest periods. For this reason, the total financial burden for real estate is also suitable for all those who have a moderate income level.
Realize the real estate financing now
Even if the interest rates for the construction loan are currently very attractive, a development may already occur in the near future, which then justifies an interest rate adjustment upward again quite already from an inflationary point of view. If you would like to realize thus your dream of the own house or the desire project, then according to expert opinion now the correct time would be due to the favorable conditions presupposed naturally the conditions are correct such as income situation, self capital portion, object price etc. But even if the conditions are still so good, it is always worth an offer comparison to save interest on a construction loan.
Real estate financing: The comparison always pays off
Hardly any builder is in the financial position to pay the sum for the purchase or construction of a property completely and immediately. Rather, many are confronted with high debts on the way to their own four walls. And nevertheless the dream of the own house can be realized with a prudent and well thought out planning with the house financing.
If you also belong to the laymen who are initially uncertain and are also dealing with the topic of construction loans for the first time, then you should first determine your financial situation and find out whether you can afford your project of owning your own home at all. However, you do not have to determine the equity portion, but the monthly financial burdens that are coming to you.
At the latest at this point the bank will play a significant role. But beware: generally get several offers from credit institutions for your home financing and also subject to the respective conditions such as initial repayment, interest rate, interest rate lock etc. an objective comparison. Because a comparison is very important for you as a future borrower even if this takes some time. Because should you miscalculate with construction financing not only the real estate financing can fail, but in the worst case even the forced sale of your real estate threaten. Only if you make a careful comparison, you will find a perfectly tailored home financing, which meets your individual needs and especially your financial circumstances.
If you decide to build a house, the easiest way to finance this is through a construction loan. However, before taking out such a special-purpose loan, you should inform yourself comprehensively about which of the various options exist in the field of construction loans and real estate financing and which form of financing offers the most suitable framework for your individual plans and needs.
It is better to be too generous than too tight with the amount of credit you need
First of all, before taking out a construction loan, you should carefully analyze your own income situation. Thus the repayment of the credit rates may never affect the own standard of living in negative regard, but with the monthly income reserves can be served. Before signing the contract, it is also important to consider whether you can continue to service the loan in the event of offspring or a change of job, so that in the event of family or career changes, you do not run into financial difficulties due to a construction loan that may be too high in terms of rates. It is also important that you always keep a certain reserve, regardless of the credit line, in order to be able to pay for additional costs associated with the purchased property, such as repairs or purchases, out of your own pocket in case of emergency, without additional burdens. In order not to worry much about the ongoing ancillary costs of your own property, you should therefore, in addition to repaying the actual construction loan, always make sure to invest certain savings for a specific purpose. So that you can also experience a perfect move-in when buying a house, you should always make sure that not only the purchase price for the property and the land is secured for you with the conclusion of a house financing, but also that all basic equipment of the house can be realized before moving in, such as flooring, sanitary facilities, kitchen, fireplace, etc. Therefore, both before buying a house and before taking out a loan, you should be clear about what costs are necessary for the actual purchase of real estate and what costs are necessary to ensure that a house is ready for occupancy. The rule of thumb is that you should always calculate higher before the intended credit volume is not sufficient. Also various items such as property tax, municipal property taxes, groundwater tax, fees for notaries, etc. should be taken into account when choosing a loan, so that you do not have to save on the things of everyday life.
Select the appropriate term with the appropriate repayment modality
Of course, the term of the construction loan is just as important as the actual loan amount. Thus, it is always recommended that you choose a credit line so that you are preferably at the beginning of retirement age debt-free and then also fully enjoy the benefits of owning a property without any remaining debt. For this, you can choose between different models when comparing different types of construction financing, which are mostly adapted to your very individual needs and financial possibilities in terms of variation and flexibility in repayment progressions.
Also a credit comparison for small amounts such as for a 500 euro loan, 1000 euro loan, 5000 euro loan, 10000 euro loan or for a 50000 euro loan is worthwhile. For customers with creditworthiness problems, there is also a solution through a loan without Schufa.