Making the dream of owning your own home come true: The interest rates for the loan are low – that makes more and more people play with the idea to build or buy themselves. But beware: even in times of favorable loans, there are some pitfalls that you should avoid when financing your own property. Here's how to find out which ones.
Is the loan with the lowest interest rates always the best?
The answer is no. When it comes to construction financing, it's always the overall concept that's important, not just the interest rate. It is always the amount of equity, the length of the term, the amortization rate, and the fees that play a role along with the interest rate as well. Financing offers with an interest rate of just over one percent are attractive, but only have a term of ten years. If after this period the interest rates rise again, it can still be costly. It is better to have the interest rates fixed for the entire term of the loan. This is possible with a so-called full repayment loan or a combination loan, where the loan is combined with a building savings contract. For more information on the topic, visit www.schwaebisch-hall.de and other providers on the net.
Decisive: The redemption portion
The higher the repayment percentage in construction financing, the faster the loan is paid off. The good thing about the current low interest rate situation is that more money can go into repayment. If in the past it was one to two percent, now more can be paid off, the loan is repaid faster. So the homebuilder pays less interest – in less time.
Important: Pay attention to the situation
The location of the building site is very important, because it has a crucial importance for a financially successful resale in the future. A good environment can be recognized by an overall upscale standard of living, which is characterized by a beautiful landscape, good infrastructure, many recreational opportunities and a positive economic development. By the way, such situations are not only found in the West, but increasingly also in the East of the Republic.
The real estate as a retirement provision – is that sensible?
Yes, but only to a limited extent. One's own home should always be only part of a retirement plan, and not the only building block. If this is the case, for example, in the event of a move away for professional reasons or a failed relationship can threaten large losses on resale. A property as a retirement plan always pays off best if you live in it as long as possible after retirement. And: A property should always be completely paid off at the time of one's own retirement – this should also definitely be taken into account in construction financing.