Property financing

Important tip for property financing

In most cases, purchasing a property also includes housing loans. When applying for a new building including a plot, financial confirmation by a bank also usually has to be submitted as part of the application documentation. It is therefore important to find out enough information about the various financing options in good time.

Before planning financing, a financial plan should be prepared

It is important at the start of any property financing to prepare a personal financial plan in advance. Included in this are both the equity capital available and monthly income and outgoings. It can be established, especially by listing monthly payments, how high the monthly surplus is for financing a credit rate. However, the error should not be made of estimating the current rent as the loan instalment. If there is no longer a surplus after paying current rent, financing should then be treated with caution. Unlike in a tenancy, owning your own home also entails incidental costs such as insurance contributions, energy costs or taxes on owners. When planning your personal finances, a surplus of at least approx. 100-200 euros should be available so that even unplanned payments can be made.

Different financing models for property financing

Experts recommend basing property financing on several pillars. On the one hand, sufficient equity should be available. This can be in the form of savings or a plot that has already been paid for. Even personal contributions count as equity. However, personal contributions should only be taken into account if certain construction phases have actually been undertaken. The second pillar of housing financing is always the bank loan. This too can be applied for in different ways. One of the most common ways is a loan with a variable interest rate or a loan with a fixed interest rate. In periods of low interest rates, it is definitely worth getting a fixed rate of interest because this can therefore not change subsequently for the agreed contract period. Though a variable interest rate agreement means a lower interest rate, this can change, however, as soon as the interest level rises. Last but not least, promotional loans should also be included in the housing loan. This type of loan can be applied for from promotional banks for certain construction projects and promises an even cheaper interest rate. Because usually only a partial amount of the complete financing can be applied for through a promotional loan, this type of addition is worthwhile for everyone.

Thinking of the future too in property financing

At present, it is particularly interesting and worthwhile to start financing. Because interest rates have reached a record low, you do not have to pay much for interest and redemption payments. In other words, a high loan amount can be applied for at a low monthly rate. This current situation also means that many people overvalue when financing. Though the credit rate can be paid now due to the low interest rate, what happens when the fixed interest rate runs out in 10-20 years and subsequent financing needs to be made? Because interest is certain to have risen by then, it is advisable to start thinking of subsequent financing now. Therefore, when concluding a new loan, it is a good idea to have a building loan contract at the same time. With this you can also apply for a loan later on but at the current interest rate. If there are already loans which expire in the near future, it is a good idea to conclude what is called a forward agreement. For a low fee, you can secure an interest rate for the future with the forward agreement.

The internet helps when comparing interest

No matter whether it is a main bank or an online bank, every bank also wants to gain something from property financing. Depending on what the cost structure at the banks looks like, different rates of interest are passed on to customers. There is the option of comparing interest rates, especially online. Furthermore, attention should be paid to repayment and the options of making a special payment. By following all these tips, there is no longer anything that stands in the way of achieving your own home.

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