Currently, interest rates for construction financing are still at a historically low level. This is of course good news for all potential real estate buyers. However, financing a property is also very complex. We therefore show you here how you can make your own building project come true and save money on mortgage rates. In addition, we enlighten you about the most important factors of the right construction financing. From the effective interest rate to the annual percentage rate to the commitment interest rate. By the way, you can find a very good initial overview of these most important building blocks of financing on Baufi24.de
Compare financing solutions
It is always worthwhile to directly compare the construction financing solutions of the best-known banks and other reputable financing providers. Powerful comparison portals like Baufi24 make more than 400 construction lenders and their individual terms and services available to you on the web and in just a few clicks. Particularly important are the daily mortgage rates. Mortgage interest arises from taking out the long-term secured construction loan and must be recorded in the land register. Since this interest is a major determinant of the total amount financed, you should pay special attention to it.
Pay attention to all the conditions of construction interest
Your terms and construction interest rates are made up of several basic financial "factors". In order to find the right financing offer, it is therefore absolutely necessary to provide identical information when directly comparing the offers. This starts with the maximum loan amount, continues with the borrowing rate and amortization rate, and ultimately shows up in the effective borrowing rate (APR). It is another absolutely crucial element of your construction financing, as it tells you about both the loan interest rates and all the additional costs of your construction loan.
Take advantage of the longer fixed interest rate
Equally indispensable for real estate financing that can be well planned over a long period of time is the interest rate lock mentioned above. It ensures that you can benefit from the currently very low construction interest rates over several years. The following applies: although you can of course opt for a shorter fixed interest rate of 5 or 10 years, it is currently simply advisable to take advantage of the attractively low interest rate level for as long as possible to your own interest advantage. That means quite concretely: Maturities of 15 up to 25 years as well as minimum repayments between 2 and 2.5% are really recommendable at the moment.
Keep financial flexibility
Basically, the more equity you have available, the cheaper the overall financing of your own house or condo will be, of course. In many cases, it is also worthwhile to talk to the bank as the lender about an unscheduled repayment and to have this fixed in writing in the construction financing contract. This pays off especially when one's financial situation improves unexpectedly but quite decisively. Whether it's due to the receipt of a large inheritance or the payout of a larger sum from a maturing insurance policy. In this way, you will retain even more financial flexibility in the future and create more real freedom for yourself, which can once again relieve your monthly budget sustainably and very effectively.