The mortgage loan for financing
Financing real estate with a mortgage loan
When it comes to financing a property or a renovation of the building, most owners take advantage of the opportunity to get a mortgage loan from their bank. Mortgage loans have been the classic loan in the real estate financing sector for decades. This loan gets its name from the fact that the bank registers a mortgage as security for the loan granted, although the mortgage is now used much more frequently.
What are the basic features of a mortgage loan?
In addition to being secured by a mortgage or land charge, a mortgage loan is essentially characterized by the fact that the borrower can only receive this loan if his creditworthiness is relatively good. The Schufa must not contain any negative characteristics and proof of a regular income must also be provided. The total terms for mortgage loans are on average between 20 and 30 years, although the same loan is rarely used throughout the entire repayment period.
Fixed interest rate and variable interest rate
Even though it often takes up to 30 years for a real estate loan to be completely repaid, there are usually several follow-up financing options available over the years. Because the borrower often takes out a fixed interest rate for a mortgage loan for five or ten years (fixed interest rate), and after this period has expired, he has to renegotiate the interest conditions or even change bank. Alternatively, it is also possible to make the interest rate variable for a mortgage loan.
