Hamburg – Owning your own home – many people dream of it. Especially at a time when rents are high in many cities and lending rates are historically low. How does the dream of owning a home become a reality? And what is there to consider when it comes to real estate financing?
consultants like her at Baufinanz24 for Rhineland-Palatinate can be found to help create a financing plan.
With the right home planning
Real estate financing should always be on a solid financial footing. Future builders should therefore first check their personal financial situation. Because they must be able to ensure that the monthly loan installments for the loan can be serviced over a longer period of time. These practical tips can help:
- How much equity is available?
- Calculate additional acquisition costs
- Pay attention to housing allowance and reserve
- use amortization loans
- Vorsicht bei Kombidarlehen
- claim funding
- The right fixed interest rate
- arrange special repayment
- Avoid tax saving schemes
How much equity is available?
Serious real estate financing without sufficient equity is practically impossible for average earners. You should cover at least 20 to 30 percent of the costs from your own funds. The higher the equity, the lower the interest.
Calculate incidental acquisition costs and repayment
Anyone financing a property should not underestimate the additional costs of buying or building a house. Because these expenses can account for up to 15 percent of the actual purchase price and thus significantly increase the total costs. The additional costs include the property transfer taxnotary fees, costs for entry in the land register, additional financing costs and, if applicable, the brokerage fee as well as renovation and relocation costs.
Pay attention to housing allowance and reserve
Even if you live in your own property, you do not live for free. When purchasing a property, there are ongoing monthly costs (housing benefit), which must also be taken into account in the budget calculation. The housing benefit is used, among other things, for waste disposal, administration costs, gardening and the maintenance reserve. In the budget calculation, the flat-rate housing benefit can be estimated at 2.50 to 3.50 euros per m².
use amortization loans
A repayment loan is a form of credit in which the repayment portion of the monthly installment remains constant throughout the term. The interest portion, on the other hand, decreases from installment to installment, so that it decreases continuously and gets closer and closer to the repayment amount. At the beginning of the loan term, there is a heavy monthly financial burden, but this becomes less and less over time. This means that the loan can be paid off faster.
Vorsicht bei Kombidarlehen
With a combined loan, you save in a home savings contract or life insurance instead of repaying. Not recommended for this model, because the better way of saving is to repay the loan, since interest on savings is always lower than interest on loans.
claim funding
The Kreditanstalt für Wiederaufbau (KfW) promotes the purchase and construction of owner-occupied real estate. For this purpose, the federal government grants loans on favorable terms of up to EUR 50,000. Since mid-2018 there has also been what is known as the Baukindergeld for families. In addition, the state grants 12,000 euros per child within ten years. This money is paid out annually and is well suited as a special repayment.
The right fixed interest rate
The historically low mortgage interest rates make long fixed-interest periods of 15, 20 or 25 years affordable. A long fixed-interest period secures the favorable interest rates in the long term and gives you planning security. Since the remaining debt for follow-up financing is comparatively low, interest rates on loans that have risen in the meantime are not so significant. If you want to make the best use of the favorable interest rate level, you must choose your repayment rate accordingly. Repayment rates that are well above the usual one percent are recommended.
arrange special repayment
Special repayments shorten the loan repayment and thus reduce the total interest paid. Important to know: The earlier the special repayments are made, the greater the effect. Many providers now grant annual special repayments of a certain amount free of charge. These often amount to five percent of the original loan amount. If a special repayment right is not contractually provided for, you should try to negotiate one if possible.
Avoid tax saving schemes
Some banks or notaries advise signing real estate contracts to save on taxes and even give “rent guarantees”. Nevertheless, one should avoid such a model. The apartments offered in this way are usually overpriced, and high commissions have to be paid. In most cases, the prospective rental income is not realistic.
Conclusion – real estate financing must be on solid ground
It is important to deal with the numerous information and tips about loans and construction financing at an early stage in order to put the financing on a solid footing. (BF/mc/hfu)
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