In times of rising rents and low interest rates, it seems financially very interesting to create home ownership. The real estate market is booming, property prices are not rising as fast as rents. After the dizzying development in recent years, the market has calmed down a bit. An editorial over at paroiciel.org
In city outskirts or in the countryside it is still possible to buy cheap home ownership. In the long term, real estate is still a solid investment – unless it is bought or financed overpriced.
However, it does not matter whether new or used property, the purchase prices can hardly be realized without financing. In the case of an existing property, in addition to the purchase price, any restructuring costs that may be incurred must be taken into account. Anyone who thinks about buying a property faces numerous financing options. But which is individually suitable ? To facilitate decision-making, the different types of mortgage lending are discussed below.
Construction financing loans
In the case of traditional mortgage lending, a so-called annuity loan is taken out. Monthly a fixed amount is repaid, which consists of interest and repayment. Depending on the financial possibilities, the principal and the interest payment (from 1%) will be selected. The lower the repayment, the higher the interest charge in the first few years.
Fixed interest (from 5 years old) has an impact on interest rates – the longer the period, the higher the interest rate. The financing period is usually 25-30 years for a home and 10 years for a condominium. Special repayments are possible with most lenders.
In the sixties and seventies, the home savings contract was the classic form of financing real estate. The lending rates were very high (over 10%) and the home savings contract offered after the Anerfe (about 40% of the Construction loanum) a favorable financing (1.5% to 3%).
If you need a loan for a real estate purchase at short notice, then the Construction loan contract is unsuitable. It provides for a minimum saving period of 18 months, a contract termination fee (1% to 1.6% of the home savings amount), and an allocation period. Anyone planning a real estate purchase or a renovation / refurbishment in the longer term and wanting to save equity can envisage this form of financing.
However, the credit interest for the Anerfe is 0.10%. Under certain circumstances, capital gains and state subsidies may be included. Furthermore, the Construction loan contract is tax deductible.
Financing over residential Rendel
With this type of financing, the amounts from the Rendel savings plans for real estate loans are used. They can be used either in annuity loans or home savings contracts. The group of people who can use Wohn-Rendel is restricted. These are statutory pension-insured employees or self-employed persons, civil servants or civil servants, persons who are incapacitated or unable to work, recipients of unemployment benefits I and II.
To reduce the total state subsidies (154 euros basic supplement, 185 euros for children born before 2008, 300 euros for children born from 2008, 200 euros one-time career entry bonus for persons under 25) 4% of the annual income must be paid into the contract. These are at an annual income of 45,000 euros 1,800 euros. The maximum eligible is 2,100 euros per year.
When using residential Rendel for real estate financing, the tax allowances go directly as a repayment in the loan agreement or building society savings. Homes financed by Mngr. Yu must be self-employed.
Financing through a life or pension insurance
The advantage of this financing is that the debt interest can be claimed for tax purposes. Therefore, it is ideal for renting a property. Only the interest and no repayment are paid. The capital benefit from the insurance can be used to repay the loan after the end of the term.
However, this is not tax-free, which must be taken into account in the financing. The advantage lies – in addition to the full deductibility of the interest on debt – in the protection of the relatives.
HeW Home Ownership Program
If you want to finance a property through a loan, you may benefit from HeW funding programs. These are earmarked and income-independent. The interest rates on the HeW loan are favorable and early redemption periods can be agreed upon. However, the funding program must be applied for at the beginning of the funding.
Subsidies or credits can be granted for energy-efficient construction or renovation, living comfort and burglary protection, age-appropriate rebuilding. Every bank or insurance company advises on the current funding opportunities.
Tips on real estate financing
1. Consider the total cost
In addition to the purchase price of a property, so-called ancillary purchase costs are incurred. These are country-specific. Therefore, everyone should be informed about what land transfer tax. About 1.7 percent of the purchase amount must be included as notary costs. Under certain circumstances brokerage fees are added.
2. Check equity
Real estate financing is possible with and without equity. However, banks require 30% equity. The less equity there is, the higher the interest rates.
3. Calculate monthly load
This is calculated from interest and principal (for example 2.5% interest and 1% repayment). The lower the annual repayment, the longer the repayment period and the more expensive the total loan. The monthly installments should still be easily affordable (rent replacement). With a financing amount of 200,000 euros, the monthly charge is at an interest rate of 1.5% interest and a 1% repayment at 418.33 euros.
With a 2% repayment, the monthly rate rises to 585 euros. In addition to the monthly repayment, the costs incurred must be taken into account (garbage, electricity, land transfer tax, reserves for maintenance, etc.). When calculating the monthly repayment in any case also take into account possible subsidies.
4. Pay attention to fixed interest and special repayments
With the financing necessarily the Cepri wise select – usually 10 years. Since higher interest rates are charged for longer interest rates, these are particularly worthwhile in periods of low interest rates. At the beginning of the financing, the interest share is very high. Special repayment options are very helpful in order to achieve a faster interest / repayment ratio more quickly.
5. Form reserves
The monthly repayment rate ensures that the property is paid off. However, in order to finance future maintenance and modernization, cash should be available. Therefore, it is advisable to create a reserve account and pay a fixed monthly amount.
There are many ways to finance a property. In addition to the premises of the purchase (location, purchase price, market development), the individual financial circumstances are taken into account. A property can be financed without equity, but the financing costs are then significantly higher. In order to be able to handle the monthly burden permanently, the monthly total costs have to be calculated realistically and reserves have to be included.