The opportunity would be favorable: Finally a house or building site found, which corresponds exactly to the long-cherished desire. And this at an offer price, which is surprisingly favorable? But now – in the crisis – take out a home loan? For most people, a home loan is THE most important financial decision in life, with a lasting impact on their future life planning. It is not only the amount of interest and the monthly installments that are due for interest and repayment that count for the decision. Rather, it is psychological components that influence the decision for or against a home loan.
In view of the current unclear situation, which is difficult to assess, a cautious approach is certainly not wrong. In fact, therefore, a few tenths higher or lower prime rate are hardly for the decisive criterion to finance a house or apartment now. It seems more important to have a stable job with a secure income, good job prospects in the future and not "cut corners" financing.
Banks are currently scrutinizing home loans more closely
Banks are currently acting rather cautiously with loans and sometimes tighten the lending guidelines. There it seems important, with interest in a construction financing and/or. not only to talk to the house bank during the first exploratory talks. Thus bank-independent on-line construction financing mediators can act still more freely and instruction-free. In addition, the big players in the industry – like z. B. ACCEDO AG has over 400 banks in its portfolio. Here's how the private customer can find the perfect fit for bank financing – without having to rely on "luck". Recipients of short-time allowance currently find it more difficult to obtain a home loan. Each check is case-by-case – that's what the bank providers' guidelines say.
Basically, this case-by-case examination has not changed much during the Corona period. Creditworthiness, liquidity and equity ratio are the most important criteria in the review, in addition to the monthly salary. Those who are well assessed by banks currently receive loans for under one percent. But even those who are currently on short-time work – but have a secure job perspective – will get a loan – even with a long term – relatively uncomplicated.
Home loans with high repayments and long maturities?
Of course, construction financing with a long term offers a special degree of interest rate security. Even if high maturities cost more interest than maturities z. B. of 10 years. Up-to-date the average of the contracts locked in the last year lies with a running time of approx. 13 years. Our experience shows that most people suggest a ten to 15 year term. Insurers also like to go to 30 to 40 years.
Currently, from our point of view, maturities of 15 years are preferable. Under certain conditions, which would have to be determined in a personal conversation, shorter or longer terms can also make sense in uncertain times. Important: All contracts can be terminated by the borrower after 10 years – subject to a 6-month notice period – without any problems and without stating reasons. Shorter terms have the advantage that the interest rate is more favorable. This saved money can then be invested immediately in the repayment, in order to be able to repay the house loan faster.
The redemption comparison is more important today than before Corona
At least 3 – but better 4 or 5 or even more – percent is required today. Why? Because the higher you can repay from the start, the faster the so-called residual debt is reduced. The residual debt shows the amount that remains after expiry of the initial contract loves and is further financed with a follow-up financing. The lower this is, the more secure is the financing. Thus, with a 2 percent amortization over a 15-year term, there is still ca. 80 percent of the initially taken up credit remains. If after 15 years the interest rate rises to z by then. b. 2.5 percent – a value that would still be extremely low in comparison to the home loan development of the last 50 years – the monthly rate then explodes by more than double.
Construction financing currently – a safe investment for asset protection?
What is currently striking: despite the pandemic, real estate prices are holding steady. Those who speculate that these will fall sharply in the near future and thus "real estate bargains" will come onto the market will probably be mistaken. Especially in uncertain times, money that is currently invested in shares, funds and bonds is often withdrawn and put into "concrete gold". Completely current numbers point to it, because the demand for purchase real estates and building land is only marginally declining. In addition all prospective customers, who have sufficient own means, are courted also by the banks. For such real estate buyers are also the current tightened criteria with the granting of credit no allzugrobe hurdle.
Against this background – most favorable interest for house loans and/or. Construction financing, virtually unbroken buyer demand and financially uncertain times due to the pandemic – does it actually seem better not to wait any longer if you have appropriate own funds and have a relatively secure job in perspective (z. B. public sector, IT industry, medical and nursing professions). Because if the capital markets drop again, the equity will also be less. And a quick recovery of the stock markets on sight is not to be expected.
Home loan now – not an easy decision
Uncertain times – secure asset protection. Thus one could summarize the real estate purchase or house construction (too) briefly. It is true that in the past, real estate was a safe haven to bring assets through a crisis. Especially if the financed property is owner-occupied. Andsererseits play many uncertain factors additionally a role. Can I service my monthly repayments punctually and over the long term?? How secure are one's career prospects and is it possible that one will change jobs and thus place of residence in the distant future?? How can I financially secure the education of my children??
As a general rule: in rather uncertain times, one should never "sew a financing on the edge", d. h. You always have to plan for a safety buffer. Put no more than 30 to at most 40 percent of monthly household income into monthly home loan payments. Also negotiate maximum flexible contracts. That means free rate adjustments (up AND down) throughout the term and additionally as high as possible, but also free of charge, unscheduled repayment agreements. The latter especially help to become debt free even faster resp. to reduce the remaining debt faster. Through an inheritance or a sale you can then put additional money into the repayment. And thus further depress the residual debt in order to be debt-free more quickly.
Everything that counts: sound advice, comprehensive research and the most flexible loans possible
Concrete gold in uncertain times can be quite useful. The emphasis here is on CAN. But this "can" must always be questioned comprehensively. This includes an honest cash review, as well as a reasonable load ceiling per month for repayment. This should include a financial buffer – and then also not be overdrawn. All this can be discussed free of charge and independently with a construction financing consultant of ACCEDO. And if these key figures fit a feasible financing, the consultant will also give you the tailored and therefore best offer from a selection of ca. 400 banks make. Without incurring any costs for this advice. After that you can decide – and possibly still choose another financing partner.
The opportunity is favorable. Finally found your dream property or building plot? Can you finance in the Corona crisis but safely?