Being able to afford your own home is the dream of many people. This can also be achieved without equity, but the banks’ requirements for borrowers without equity are higher, and the conditions are less attractive due to higher interest rates. If you still want to fulfill your dream as soon as possible, you should consider the following points.
Plan costs realistically
Various costs must be taken into account when building a house. This not only includes the construction costs themselves, but there are more to come various additional costs in addition. These increase the total credit requirement and the monthly installment amount. If you calculate too narrowly and forget important additional purchase costs and ongoing costs, you could get into difficulties when it comes to paying off.
The additional costs include the following one-off expenses:
- Commission for the broker
- Costs for the notary who draws up the purchase contract
- Entry in the land register
- Real estate transfer tax
- Development (connection to water and electricity)
- Costs for architect
- Building permit
In addition, there are ongoing costs for owners:
- Insurance (fire and building protection, etc.)
- Property tax
- other taxes (garbage fee, etc.)
Who gets a home loan without equity?
For self-employed people and freelancers without a stable income, as well as for all employees with low incomes, the chances of getting a loan without equity are poor.
1. Secure, high income
The situation is different for those who have a very secure and at the same time high income. Preference will be given to people with permanent employment relationships. Civil servants and public sector employees have an advantage because they have a very secure, stable income.
2. Age also plays a role
Those who are older and therefore only have a few years of work ahead of them are less likely to receive large loans. Young people who still have their entire working lives ahead of them, on the other hand, have enough time to repay their large loans.
3. Location of the property
The location of the property to be financed is another important point for the loan decision. Borrowers who want to buy a house in a very good location have a higher chance of getting the loan. The property serves as security for the lending bank, which can be easily sold if payment defaults occur.
Note: Your income should be high enough that, after deducting all living expenses and a buffer (for unexpected expenses), there is still enough scope for the monthly installment payments.
Be well insured just in case
Unemployment, inability to work or even your own death – there are many reasons why paying the monthly loan installment is suddenly and unexpectedly no longer possible. A certain risk can be covered with occupational disability insurance Term life insurance is possible protection in case of death. With the best possible protection, borrowers can prevent their family from having payment difficulties or even having to sell their own home.
But would you prefer to finance with equity?
Anyone who can raise 20 to 30 percent equity usually gets significantly more favorable conditions from the bank (lower interest rates!), meaning they ultimately have to pay significantly less for their dream property. Equity includes cash, savings accounts, building society contracts, stocks and securities as well as other real estate that serves as security for the bank.
Good advice is essential
Whether building or buying, if you want to live in your own four walls, you need solid building financing. How can you get a home loan without equity? A conversation with experts provides clarity. You can clarify open questions and know what is important when it comes to financing.
2024-03-05 04:10:48
#Buying #house #equity
