Those who dream of their own four walls usually need a real estate loan. At Astro Finance, builders and home buyers can calculate their interest and request a non-binding offer. Our tariff experts find the cheapest individual property loan for them from hundreds of banks and savings banks and offer advice both by telephone and on site.
A typical real estate loan is an annuity loan secured by a mortgage or mortgage. The annual interest rate is fixed (fixed) for several years, which means that it remains the same. For annuity loans, the monthly or annual rate (annuity) is made up of an interest and repayment component. The rate remains constant over the period of fixed interest rates. The residual debt is reduced with each repayment. This reduces the interest portion of the next installment and the portion of the repayment increases. If the fixed interest period ends, follow-up financing is concluded for the remaining debt (the loan amount not yet repaid) – a new loan at newly negotiated terms.
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The banks only lend money against security. The bank receives security by ordering a mortgage or mortgage on the property. The land charge is entered in the first place in the land register.
Another security for the bank results from the fact that an object is only loaned up to a certain loan limit. Depending on the bank, this is 60 percent of the purchase price. If the builder needs a larger loan, the interest rate becomes more expensive. The rest of the purchase price, as well as the incidental purchase costs, are generally financed through equity and building society contracts.
Ideally, equity should be around 20 percent of the purchase price of the property plus all additional costs, ie around 30-35 percent of the total costs. In individual cases, 100 percent of the purchase price is also financed. However, with every euro borrowed, the financial burden increases, and with it the risk of undertaking yourself financially. Because of the higher risk, banks with a lower equity component also demand a higher borrowing rate. Conversely, every euro for which no interest is payable is money earned. Above all, the burden on the livelihood of the client and his family must be based.
How much the property can cost depends on the one hand on the existing equity. On the other hand, the maximum credit is limited by the monthly rate that consumers can afford. The household calculator helps to compare the income with the expenditure and use it to calculate the monthly rate. Anyone moving from a lease to their own property should keep in mind that the rent is no longer payable, but that there are new additional costs.
The repayment calculator then calculates how high the loan may be based on the monthly rate and the desired term.
The duration of fixed interest rates is also important for real estate loans. This determines the period for which the agreed interest rate applies. During this time it is unchangeable, so the burden on the borrower remains the same. Negotiations will only begin once the agreed fixed interest period has expired. If the new interest rate is higher than the original one, the borrower may face a higher burden – depending on how high the remaining debt is. In this respect, it is advisable to agree on a fixed interest rate as long as possible in a low interest rate phase.
The advantage of a long fixed interest rate: after ten years, every real estate loan can be terminated and rescheduled without prepayment penalty, even if the fixed interest rate is still running. If interest rates have dropped further in the meantime, builders can benefit from this. If interest rates rise, however, you can keep the favorable bound interest rate.
If the fixed interest rate expires, the borrower can conclude follow-up financing – either as a prolongation with the same bank or as a debt rescheduling with another. In both cases, the annual interest is recalculated. Builders can take this opportunity to find a cheaper offer.
As long as the interest rate is fixed, the repayment rate must remain constant. If the client wants to repay the loan more quickly or even in full, a prepayment penalty will apply. It is therefore advantageous to agree on a special repayment right and, for example, to use the income tax refund or a small inheritance to repay the loan more quickly and thus save interest.
When comparing real estate loans, builders primarily pay attention to the effective annual interest rate. This includes not only the borrowing rate, but also any fees and the redemption settlement. However, commitment interest is not taken into account. This interest accrues if the real estate loan does not fall due in one sum, but is paid out over several months. For many builders, it is therefore worth paying special attention to offers that include up to 12 months free of interest.