Finally moving into their own four walls - the dream of buying a house is on many people's minds. However, thanks to the rise in interest rates and persistently high prices, owning your own home is becoming increasingly out of reach. However, there are ways to get started with the right construction financing. To ensure that nothing goes wrong, prospective homeowners need to have the right instinct for the banks' terms and conditions. Very important: A solid construction loan relies on equity. This can result in a positive interest rate - and your own home will be debt-free more quickly in the long term. When looking for suitable financing, prospective buyers should also follow these tips.
1. compare offers and keep interest costs low
Construction financing involves hundreds of thousands of euros. For good locations, we are talking about 6,000 euros and more per square meter. Even a small difference in interest rates can make a big difference. Here is a small example:
A construction loan of 300,000 euros with a fixed interest rate of 10 years and an initial repayment of 2 percent will result in interest costs of around 108,000 euros after 10 years at an interest rate of 4.1%. With an interest rate of only 3.7%, the interest costs would only be around 98,000 euros - a whopping difference of 10,000 euros.
That is why one of the most important points is to compare the various offers. This makes it possible to find out exactly who can provide the desired financing at the most favorable conditions. Interested parties can find more information at https://www.baufi24.de/immobilienkredit/.
However, this is not just about the interest rate. Banks and financing institutions should also be scrutinized with regard to special conditions such as the suspension of repayments, special repayments or fees and commitment interest. The latter are charged if the loan is not drawn down as agreed, but the drawdown is postponed.
2. choose special services only if necessary
Banks offer special conditions for construction financing - such as the agreement of an interest-free period or special repayment options with a higher repayment rate. At first glance, these services make perfect sense. However, banks also charge for them. The interest surcharge is clearly noticeable in the long term. If you do not need these services, it is better to forego these special conditions. Otherwise, too much money will flow unnecessarily into the interest payment.
Instead, it is worth taking a closer look at the comparison. Particularly when it comes to the special repayment option, there are always differences in practice. Some banks charge money for the first one percent of the unscheduled repayment, while others offer up to 5 percent free of charge as an unscheduled repayment. If you make clever use of the loan comparison at this point, you will save money on your mortgage.
The ideal procedure:
- Enter all desired special benefits
- Enter all other important data (loan amount, fixed interest rate)
- Compare loans and choose the financing with the most favorable interest rates
3. optimize the fixed interest rate and initial repayment
The fixed interest rate has a long-term influence on construction financing - due to the fact that it determines the amount of the loan interest rate in the long term. The general rule of thumb here is: if the interest rate level is high, a short fixed interest rate may make sense. This is based on the hope that interest rates will fall again over the next few years, allowing you to quickly find favorable follow-up financing.
The initial repayment should be as high as possible - without overstretching yourself financially. The higher the repayment rate, the faster the loan is paid off. This naturally reduces the interest burden in the long term. A repayment rate of two to three percent is generally recommended.
Conclusion: With the right preparation for favorable construction financing
Successful construction financing depends on many factors. You should start by analyzing your own financial situation. Based on this, the financial framework should be defined. A change of bank can also open up new options.
What is absolutely essential: An interest rate comparison. This is also about small differences that quickly become noticeable. At the same time, special conditions should not be lost sight of. An unscheduled repayment, which is included in the loan package free of charge, creates flexibility. But: Where banks charge a fee for this, the "advantage" should be put to the test. And, of course, every borrower must ask themselves whether the fixed interest rate and repayment installment can really be afforded in the long term.
