When can I take out a real estate loan?

9 Jul

More and more people are looking for a house of their own – given the currently low construction rates, this decision makes sense.

A home not only provides independence but also security and is also an optimal way to invest your capital. Still, most people can not afford to buy or build a home completely out of pocket and opt to take out a real estate loan. What to look for and how to find the right bank – you can find out everything here.

Why is the right time for a real estate loan now?

Why is the right time for a real estate loan now?

No doubt, building or buying your own home is a step that should be well considered and requires proper planning. The majority of people buy or build once in a lifetime and usually invest all the available capital.

There are many reasons why you should choose a real estate loan right now – conditions for financing have rarely been as favorable as they are today. So, if you’re thinking of buying a home, it’s best not to think about it for too long, because interest rates can rise very quickly as soon as interest rates turn around.

Of course, low interest rates should not be the only incentive to finally fulfill the wish of one’s own house. Maybe you already have a certain place in which you want to live and already have some capital to take out a real estate loan? The first step in this case should be to make an accurate calculation.

Do not forget: Buying a property not only involves the mere construction or acquisition costs of a building, but also other ancillary costs – and they can quickly become expensive.

Funds fall – can I even afford a real estate loan?

Funds fall - can I even afford a real estate loan?

Especially when you live in a city where rental prices are exploding, you may think more and more about investing in your own home.

The monthly installments for construction money may well fit into your own budget – but it is still a must to make a detailed statement of monthly expenditure and revenue before. Only then can you determine how much credit you can actually afford.

To find out what your own budget looks like, you can start a very simple calculation: orient yourself to the current rent and add all that is currently saved monthly. The difference between revenue and expenditure is the budget you would have every month.

Do not forget two important points: You also have to pay the second rent for the current apartment during the construction phase. In addition, you should also calculate unexpected costs or a financial buffer if there is a bottleneck.

If you use the cold rent to calculate the budget, you should also include the operating and heating costs. Use this information to refer to the data on the last billing. Take into account here that the heating costs in a detached house are generally much higher than in a multiple dwelling.

Pay attention to maintenance costs

Furthermore, it has to be considered that as a homeowner you are responsible for the maintenance of the building and this will sooner or later require additional expenses. Do not invest your entire capital including real estate loan in the house construction, but save a financial cushion.

For most people, it is not possible to realize the financing of a home without any compromise or renunciation. Therefore, it is important to note all (!) Expenses for a few months. How much do you spend each month on food, stimulants and other things?

Are there any clubs where you are a paying member or are there other running costs? The greatest potential for savings is usually shown when traveling: those who have traveled more frequently each year often have to forego this first, or at least limit themselves. However, the house is paid off much faster and you enjoy more financial freedom.

How much equity do I need for the real estate loan?

How much equity do I need for the real estate loan?

How much equity you should bring yourself, if you want to take a real estate loan, it probably makes any future homeowner much thought. Basically, it is of course recommended to start as early as possible with building society savings or otherwise to put capital aside. Furthermore, a reputable bank will grant a loan to a future client only if it also has some equity capital.

As a rule of thumb, around 20% of the total costs should already be available from your own resources – the more, the better, of course, as the loan is lower. Especially since a financing without any equity owns a much too high financial risk, unless you are just one of the good earners.

In addition, banks typically charge higher interest rates when there is little equity available – again, this has to do with the greater risk the bank would take.

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How to find the right bank – and which real estate loan is the best?

How to find the right bank - and which real estate loan is the best?

Because there are now an infinite number of banks that offer real estate loans, it can quickly be a challenge for prospective buyers to find the right offer. First and foremost, of course, you should first inquire at your own house bank.

Here one has usually the best chances on a loan, if one has been so far a reliable and longtime customer – if one still has a personal connection to the coworkers, this is only of advantage for the lending. Nevertheless, it pays off to take a closer look at the offers of other banks at the same time.

Today, it is particularly easy to compare the interest rates and loan offers of individual banks over the Internet. Different portals offer a practical loan calculator in which only a few data have to be entered – such as the term and the desired loan amount.

Subsequently, this information is evaluated immediately and you get a clear table with all the banks that offer real estate loans. Now you have to choose only the most attractive offer.

Not only the interest decides

It is very important not only to be guided by a low interest rate, but also to check the remaining conditions. Read the fine print carefully and ask if anything is unclear – even more so if you already want to sign a contract.

Regarding the term of the own budget should be considered: A longer term is monthly pleasant for the purse, but also brings more interest costs and thus a longer repayment with it. Basically, a home should be fully paid off in a maximum of 20 to 30 years – so choose a property that fits into your own budget.

If you have a personal conversation with the respective bank, it is also advisable to prepare good arguments in advance for the loan. In addition, bring proof of income directly to the deadline to ensure your own liquidity. In this way, the chances of a real estate loan are high – and the dream of the house is nothing in the way.

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