As a civil servant or civil servant in the public sector, one often has advantages to enjoy in financial matters. This also applies to construction financing, which is easier for civil servants. With banks, credit institutions and co. There are special officer loans that specialize in real estate purchase or construction. These differ in various small details from the known construction financing.
The biggest difference
The home loan for a civil servant is a loan granted by various banks to special customers. As the name suggests, in this case it is civil servants. However, banks may not take this concept too seriously. Accordingly, not only civil servants can take advantage of the loan, but also employees in the public sector. In terms of the type of loan, the home loan for civil servants is an installment loan. The first difference becomes apparent here: An ordinary installment loan, as granted to private customers, does not allow such high loan amounts as the civil servant loan does. In addition, the loan has the particularity of being a bullet loan. This means that the borrower does not pay off the monthly loan amount plus interest, but the interest alone. The final repayment of the sum takes place at maturity of the loan, as is typical for bullet loans.
The process of a civil servant loan
Since it concerns with most officials credits to the building of houses a final-maturity loan, the expiration precipitates the same. First, the civil servant receives the desired loan amount, with which the house construction or purchase is feasible. In this context, the loan interest rate to be paid is agreed upon. In addition, a term is set within which the amount can be used. If the term is over, the loan must be repaid in full. To make this possible, most civil servants have to pursue an additional savings plan or endowment life insurance policy. This makes it feasible to collect the money for the redemption gradually. If the savings plan or the insurance becomes due, the loan amount can be redeemed with it. That's why it's practical if the term of the savings contract and the civil servant loan are identical.
The special features of the civil servant loan
Of course, a home loan for civil servants offers even more special features, not only that it is a bullet loan. In comparison with other installment loans, it quickly becomes apparent that the interest rate on a home loan for civil servants is significantly more favorable. For ordinary installment loans, the interest rate is on average four to nine percent. On the other hand, civil servants often have to pay an interest rate of less than three percent. Therefore, a civil servant loan is a good alternative to the classic mortgage loan, because it is cheaper. Another feature is that the loan amount can be relatively high. Loan amounts from 100.000 and more are not uncommon, which is why the civil servant loan has become a mainstay of construction financing. Due to the high loan amount, the terms are longer, ranging from 15 to 20 years.