Owners of a home can enjoy a great financial independence and security in addition to their own four walls. In addition, the construction of your own home is a secure retirement, as the ownership of a home also serves as an investment. Although a loan for the house is not rocket science, but also no child’s play. Many factors must be taken into account and taken into account. For example, it has to be clarified in advance how much equity is available, who is creditworthy and what details still have to be taken into account.
Loan for (your) house: checklist with the most important
Obviously, financing a house of your own is costly and usually requires applying for debt in the form of a construction loan or home loan. However, those who decide to take this step should not act prematurely, but should approach the matter well-considered. Therefore, many financial experts advise to note the following checklist when taking credit for a house:
The higher the interest, the greater the debt burden and the financial burden. Therefore, pay attention to a low annual percentage rate that does not affect your economic situation too much. In some cases, a combination of mortgage and construction loans is more profitable. It is best to check your options with the help of a specialist. But do not forget to consider the total effective interest rate even in combi-financing.
Financing offers with long-term interest rates are advantageous if the interest rate level is rising and rising. The situation is different with a high level of interest rates with a downward trend: Here, short fixed interest periods are certainly the better choice. But even a variable loan is appropriate in this situation.
Not infrequently, borrowers also want to make unscheduled repayments to reduce the debt burden. But that is only possible if you agree with the lender on a special repayment right. You should do this right when you set up a contract, because some banks will not accept special repayments in retrospect, unless this has been agreed in advance. Avoid absolutely so-called prepayment penalties. This is a compensation that the lender receives if the borrower repays the money owed early. The prepayment penalty is intended to offset the economic disadvantages suffered by the lender as a result of the premature termination of the term.
Keep in mind that the monthly installment may increase after the interest rate period expires. For a home purchase, do not go straight to the first lender. Give yourself some time and compare in peace and quiet the terms of several home loans. That way, you can save a lot of money. Interest-saving saving helps you to at least partially settle the residual debt at the end of the fixed-interest period.
Credit: Who gets a loan for a home?
Of course, not every applicant gets a loan to finance a house. Rather, certain criteria must be met for lenders to grant a home loan application. After all, the banks are all about reliable repayments and predictable interest income.
This includes first and foremost the age: Of course, only borrowers are accepted, who are fully capable of business, ie the age of 18 have completed. But even retirees and seniors come across an age limit on the loan application – even with a good income. The place of residence is just as relevant, because only those who have a permanent residence in Germany are creditworthy.
The most important conditions include a regular income. After all, the bank, building society or any other lender can only be sure that you can repay the borrowed money.
Temporary employment or probationary workers, however, are considered critical. Likewise, self-employed people, even if they earn a higher income than employees. After all, the income of self-employed persons can not be planned so reliably in the long term as that of an employee.
The creditworthiness of the applicant is also a decisive factor for the approval of the home loan. Logically, nobody gets a loan despite negative credit bureau and also an unreliable payment behavior with other current loans or earlier loan agreements have a strong negative impact on the creditworthiness. Likewise, credit cancellations, account cancellations and consumer bankruptcy are a no-go.
In addition, the reasonable level of repayment rates plays a significant role: Here, the monthly financial burden must not be too high compared to the income level. If, for example, you earn 2,000 euros net and have to pay a monthly installment of 1,000 euros, your loan application will surely be rejected.
A minimum income to take a loan for a house, can not set a flat rate. Because here it always depends on the personal circumstances of the applicant: Are they married or single? Do you have children or are you childless? Do you have any other payment obligations on your shoulders? All this and many other factors will be considered by the lender.
From whom do you get the credit for a house?
Loans for home purchase or construction can normally be obtained directly from your house bank. Also eligible are direct banks, which often offer cheaper home loan terms because they do not have a costly store structure. However, house financing can also be applied for by insurance companies, building societies and financial brokers.
The term: how long do I have to pay a loan for the house?
The maturity that best suits your personal situation depends on the current interest rates on mortgage lending, but also on your financial position. If you have less money, you should choose a lower monthly installment with a longer credit term. A short financing period is only advantageous if you are able to fully repay the home loan within the period of the fixed interest period.
Credit for the house: what happens in case of unemployment or divorce
Taking credit for a home, of course, involves certain risks. All it takes is a stroke of fate, such as a costly divorce, loss of employment, or the loss of your entire fortune – and you are no longer able to pay the monthly installments for mortgages you have applied for.
And the danger is quite real: According to the Federal Statistics Office, every fourth bankrupt indicates a personal bankruptcy due to unemployment. Instead, 20.4 percent explained this with uneconomical housekeeping and 8.3 percent with illnesses or accidents. In the last place then followed with 3.8 percent a divorce or the death of the spouse.
Most of them fear a foreclosure sale in such unfortunate situations. But the worst case does not have to happen if you react in time. In the following we give you valuable tips on how to proceed in such a situation or how to prevent it.
You can do that before taking out the home loan:
- Take out residual debt insurance or unemployment insurance
- Conclusion of a risk life insurance
- Already at the planning of the house purchase or construction set aside about 3 net monthly payments for bottlenecks
- Cover 20 percent of the total from equity
- Additional costs (gas, water, electricity, fees, insurance) pay yourself
- Finance plan to consumer centers
You can do that in case of acute payment problems:
- Minimize the rate for mortgage lending
- Deferment of credit for the house
- Apply for a repayment subsidy (only possible in individual cases)
- Seek debt counseling
- Searching for guarantors
It is crucial to get in touch as soon as possible with the Darelehensgeber or the debt counseling and to explain the situation. Many are open to their debtors and ready to renegotiate. If the lender has already set a foreclosure sale, it is often too late.