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When the home loan and savings contract is nonsense

BOn my “wanderings” through the assets of private investors, I often come across fixed-term loans that are supposed to be repaid with the help of building society contracts. Curious as I am, I can rarely avoid the question of why these contracts were concluded. Most people respond with an embarrassed smile that they couldn’t tell me either. Isn’t that strange, ladies, or do you find it normal, gentlemen, to simply conclude a contract and not know what the purpose is? Perhaps you can tell me what practical nutritional value the building society savings contract has in the following case.

The investor is 50 years old and bought a small apartment in Stuttgart five years ago, which she rents to a civil servant for 1700 euros a month. The property cost 650,000 euros. The lady had 150,000 euros in her pocket, so a mortgage of 500,000 euros was necessary. The bank has sold the woman a fixed loan that is to be replaced in five years by a loan from a building society. The nominal interest rate on the mortgage is 0.96 percent per year. As a result, the monthly interest rates are 400 euros.

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