First of all: Why is 110% or full financing worthwhile?

As an investor, you prefer to take out a real estate loan and pay it back over a long period (approx. 35 years). This has advantages: you need less equity, so you can “invest more money” (because you don’t need any). This allows you to generate more rental income. Yes, there is interest, but there is also inflation. This devaluation of money ensures that loan installments actually become “cheaper”. Learn more here: Real estate as an investment Advantages.

That’s why it’s worth calculating the 3 scenarios!

Full financing of a property: Costs

Example of full financing: Assuming the purchase price of the property is EUR 240,000 and no equity is contributed:

• Purchase price of the property: 240,000 euros
• Equity: 0 Euro
• Loan amount: 240,000 euros

Conditions of the loan:

• Interest rate (effective): 2.5% – depending on the bank / credit rating, the interest rate for full financing may be higher, by 0.05 to 0.1 %
• Term: 20 years
• Monthly installment: 1,218.75 euros

Financing at 110% of the purchase price: Costs

Example of 110% financing – In this scenario, 10% of the purchase price is financed in addition to the purchase price for ancillary costs and reserves:

• Purchase price of the property: 240,000 euros
• Equity: 0 Euro
• Loan amount (including 10% ancillary costs): 264,000 euros

Conditions of the loan:

• Interest rate (effective): 2.5% – depending on the bank / credit rating, the interest rate for full financing may be higher, by 0.05 to 0.1 %
• Term: 20 years
• Monthly installment: 1,345.00 euros

Financing with equity: Costs

Example with equity – Assume you contribute 20% of the purchase price as equity:

• Purchase price of the property: 240,000 euros
• Equity capital: 48,000 euros
• Loan amount: 192,000 euros

Conditions of the loan:

• Interest rate (effective): 2.5%
• Term: 20 years
• Monthly installment: 975.00 euros

How to finance a house and condominium?

Choosing the right financing option is crucial to the long-term success of your property purchase. Full financing allows you to buy without equity, but leads to higher monthly installments and overall higher total costs due to interest. Financing with a higher loan amount, for example 110% of the purchase price, can cover the additional costs, but further increases the monthly burden.

Bringing in equity makes it possible to lower the monthly installments and reduce the overall costs, as the loan amount is smaller. This also allows for a better interest rate as the risk for the bank is lower. However, it is advisable to retain a certain amount of equity for unforeseen expenses or repairs.

Ultimately, the best financing option depends on your individual financial situation and your long-term goals. It is advisable to plan carefully, think through different scenarios and seek advice from a financial expert if necessary to make the right decision.

Favorable financing for house & condominium?

Make life easy for yourself and prepare for your house or apartment purchase at an early stage. Step 1 is always to clarify the financing. Put simply:

How much house can you afford? How much apartment can you afford?

Step 1: Clarify financing before buying

Let’s start with the financing.

Learn more here:

• Real estate financing
• Equity
• Plan financing / self-disclosure
• Obtain a financing offer

Tip! Construction financing in comparison

Good providers, good conditions, good investment. Compare different providers and their current interest rates and conditions online and free of charge:

• Construction financing comparison

Building interest rate comparison – when is it worthwhile for your property?

Various factors are used to calculate construction interest rates . First and foremost, however, the construction interest rates are derived from the situation on the financial markets. The most important of these are the key interest rates, which are set by the European Central Bank in Germany and which indicate the interest rate at which money can be borrowed on the market. For the future property owner, the key interest rate has an effect on the annual interest rate of the construction financing and especially in times of crisis, this is favourable for the builder.

By applying for low interest rates on loans, economic stimulus is hoped for various industries. This also applies to the real estate market, because in order to strengthen the market, low interest rates are offered to the builder. Although the prime rate here already gives a certain direction, all banks still have different interest rates that are offered to customers. Because of this, it is well worthwhile for builders to strive for a construction interest rate comparison to really achieve the best deal for their own property.

Factors influencing the individual determination of the construction interest rate

However, the market-dependent borrowing rate is not automatically the interest rate that the borrower must pay per year on the remaining debt. The final interest rate is only determined after taking into account many other factors. These include, among other things, the processing fees of the banks, because they charge a fee for the provision of construction money.

The so-called effective interest rate is therefore already somewhat higher than the actual debit interest rate. From bank to bank, different effective interest rates come about for the builder, which vary depending on the construction loan. Another factor is the personal circumstances of the builder. This includes things like the solvency due to the credit rating, the income and the available equity.

These factors also have an influence on how high or low the final construction interest rate is. Concrete information about the interest rate can therefore only be given once this personal information has been obtained. Here again shows how important the comparison of different construction interest rates can be to find the right loan individually tailored to you.

Information on the construction interest rate comparison – what is required of you?

During a bank appointment to discuss the construction loan, some important information will be requested from you in order to tailor the construction interest rate to your individual construction project. These include, among others, the following influencing factors:

Location of the property – the postcode as an important influencing factor

The postcode is considered to be one of the most important criteria by the financing calculators. The reason for this is quite simple, because banks and credit institutions can already find out a lot about the location and the location quality of the property on the basis of the postcode. It is now easier for the banks to classify the property. Some well-known postcodes, such as 60323 which belongs to the prestigious location of Frankfurt, the Westend recognize banks immediately and know how expensive real estate can be there. Some institutions for loans advertise that properties or construction projects in certain areas or places get an interest rate advantage. The specification of the postal code is therefore inevitable.

Equity capital and the required loan amount

Of course, you should also know how high the loan amount is that you need for the purchase or construction of the property. The determination of the available equity is enormously important here. So that you can be sure what you can really afford, you should calculate your exact budget in advance and draw up a budget plan. The equity determines the loan amount available and therefore the property you can afford. At the appointment with the bank, you should already know the exact purchase price of the house, so that the calculation for your loan can be calculated accurately.

Purchase price of the property

The loan-to-value ratio must be present when calculating the mortgage interest rate so that the bank can assess the risk of lending. The loan-to-value ratio is the ratio of the required loan amount to the mortgage lending value. The mortgage lending value, in turn, is the market value of the property minus a safety discount of 10 to 30 percent. This is calculated to cover possible renovations or additional costs and to have a small cushion. The conditions advertised by the banks usually refer to a lending limit of a maximum of 60 percent of the mortgage lending value.

Desired fixed interest rate from the builder

The builder should always have an idea of the fixed interest rate and also specify it. However, the longer the fixed interest rate is desired, the higher the debit interest rate will be. A known interest rate requirement is therefore important both for you and for your advisor.

Desired repayment rate from the building owner

The builder should also have an idea of the desired repayment rate, as this can also have an impact on the borrowing rate. Some banks charge a surcharge on the borrowing rate if the repayment falls below a certain limit. This is normally the limit of two percent, which should not be undercut. The reason for this is that low interest rates lead to extremely long terms, which can be significantly accelerated again by the repayment rate or unscheduled repayments.

However, you can also get an approximate construction interest rate online. There are many platforms that carry out a comparison of construction interest rates with various banks and credit institutions and provide you with an approximate overview of the available offers. Even with these online comparisons, however, you must provide all this information so that the loan offer can be individually tailored to you.

Optimal interest rate design is the be-all and end-all for a good loan

In order to keep the future interest rate risk as low as possible for the builder-owner, a number of things should already be taken into account when choosing the fixed interest rate period. Only certain options are usually offered by the banks and institutions. Mostly, the following options are offered:

• Building loan with variable interest rate
• Fixed interest rate of 10 years
• Fixed interest rate of 5 years

More and more credit institutions and banks have recently started to offer customers fixed-interest periods of 15, 20 or even 25 years. However, loans with variable interest rates are critical for customers, because they involve a high risk. Any increase in interest rates in the market will be used by the lender to increase their interest rate and so the cost to you will increase. Such loans usually have the most favorable interest rates, but are too risky and should rather not be entered into by builders.

This is an important basis for keeping the subsequent interest rate risk as low as possible. It is always optimal for the customer if a full repayment loan is concluded. A full repayment loan is a real estate loan where the interest rate remains constant over the entire repayment period. The interest rate risk is therefore eliminated and the customer is not at risk of increased interest rates during the term. Consequently, there is no need to take out follow-up financing. However, these full repayment loans are usually significantly more expensive than ordinary annuity loans, which have a fixed interest rate of 5 or 10 years, for example.

Repayment rate – decisive for the construction interest rate

Besides the right interest rate, the initial repayment is the decisive factor for a successful loan. Like the interest rate, the repayment rate depends on many factors, including the current situation on the market and interest rates. In low-interest phases, higher repayments should therefore be agreed, which should not be less than three percent. In such a case, an initial repayment of five percent is particularly favourable for customers. However, this can fluctuate depending on the situation.

However, always keep the interest rate in mind when calculating the repayment rate, as the two have a strong effect on each other. You should still be able to afford the repayment rate without any problems. The higher the repayment rate, the faster the building loan is paid off and only a small residual debt is still available for the follow-up financing. The higher monthly interest rates will then no longer have such an enormous effect on the monthly instalment.

To show how differently the financing can proceed with different repayments, the example calculation can clarify, in which in each case a different repayment rate is selected and the other details remain identical.

Example 1:
The loan amount is 150,000 euros with an interest rate of 1.80 %. The repayment rate in this example is 5%. The fixed interest rate is 10 years and the monthly loan instalment is 850 euros. Based on the given data, the borrower still has a residual debt of 67,893.37 euros after 10 years. The follow-up financing can therefore be started with a new interest rate of 5% and a new monthly instalment of 1,010 Euros. The total term for the loan is therefore 17 years at the end.

Example 2:
The loan amount here is also 150,000 euros with an interest rate of 1.80 %. However, the repayment rate in this example is only 1%. The fixed interest rate is also 10 years and the monthly loan instalment is therefore 350 euros. Based on the given data, the borrower still has a residual debt of 133,578.67 euros after 10 years, i.e. considerably more than in example 1. The follow-up financing can therefore be started with a new interest rate of 4.80 % and a new monthly instalment of 680 euros. The total term for the loan at the end is 57 years for the borrower.

Building interest calculator – simply obtain offers online

Before you go to the bank, however, it makes sense to perform a preliminary calculation online to get a feel for the market and the current situation. With these calculators, you can also enter your individual details and obtain an offer tailored to you. So there are many advantages for future property owners, because an overview is created. You can find the best online construction interest calculators here:

• The construction interest calculator from Dr.Klein
• The building interest calculator with redemption schedule of current building interest rates
• The financing calculator for the building loan from Immobilienscout24

Favorable follow-up financing to the real estate loan?

You can choose between three different financing options for follow-up financing. Experts will check the best conditions for you and advise you in detail on the forward loan, the prolongation and the rescheduling of the real estate loan. Which follow-up financing is suitable for you depends on various factors and requires optimal planning.

The most frequent questions in consultations

• How high are the interest rates for follow-up financing?
• How does the follow-up financing work?
• What does follow-up financing cost?
• When can you do a follow-on financing?

Roughly speaking, the following applies to follow-up financing (rule of thumb)

If the new interest rate is at least 0.2% below the previous one, the debt restructuring is worthwhile.

What do I have to consider?

• Early start of planning
• Save equity capital
• Check offers thoroughly
• Negotiate with your bank advisor
• Tip. Not only interest rates, also pay attention to the ancillary conditions
• Set monthly installments
• Optimize them so that you make all repayments safely, regularly
• If possible, make additional special repayments
• Tip. Also use your special termination option

After 10 years, you can reschedule and make use of your special termination right, more on this in a moment, after the tips the next bank appointment.

Real estate financing: How the bank thinks – Video Tip

The following two videos give good insights into the mindset of banks with “Internals on Lending” and “How to Prepare for a Bank Appointment”.

Video: Internals on lending

For more information, check out this video by Alex Fischer:

Video: How to prepare for the bank appointment

Follow-up financing before expiry of the fixed borrowing rate

Would you like to refinance earlier due to an older and high-interest property financing and not wait until the fixed interest rate expires?

After 10 years, you can reschedule and make use of your special termination right without your desire for a cheaper loan for your property being accompanied by an early repayment penalty for the bank. In terms of follow-up financing, low interest rates are the first choice of our customers. Keep in mind that a low interest rate alone is not enough if the terms and conditions elsewhere do not suit you. We will find your personal follow-up financing and make you an offer that suits you in its entirety.

Compare the advantages of individual follow-up financing

Identifying the best terms on an offer requires a lot of know-how and core expertise in evaluating follow-up loans. Your lender will take this task off your hands and recommend a loan that matches your desire for follow-up financing in terms of its orientation and contractual basis.

Each lender’s condition offer is unique and tailored to your needs.

There is no blanket, for every property owner equally suitable follow-up financing with primary advantage. First and foremost, it depends on the right choice of loan and on the conditions and terms of flexibility that suit you.

Calculator: rate, repayment rate, residual debt

What will your planned construction financing cost you? But much more important in everyday life, how high will your monthly burden be and what happens if the repayment rate changes later? How high will the remaining debt be at the end of the fixed interest rate? Many questions, this rate calculator gives you all the important answers to rate, repayment rate and residual debt.

• Rate calculator

Do you have several financing offers?

Your house bank and a third-party bank make them financing proposals and you now want to know which is the more attractive? – With an offer comparison calculator, you can calculate with little effort, where you can save more or which offer has the lowest interest rate. For a construction financing you do not have to ponder much. A budget calculator gives you a good overview of your finances. You simply enter your monthly net income (minus taxes, social security contributions, child benefit or similar). If you have a fixed amount of equity that you would like to invest, enter this value as well. After that, the calculator can obtain your monthly load. Since, in addition to your income, expenses are always an important issue, a budget calculator calcul ates you the perfect sum, the monthly expenses for a real estate financing.

Purchase cost calculator: ancillary costs, notary costs, land register entry, land transfer tax

With a purchase cost calculator you can prepare for additional costs such as notary fees, land registry entry, land transfer tax and broker commission. Once you ask yourself whether it is worth paying rent every month, or whether it would not be better to finance the home with this money. With the rent calculator you can find out how buying a property compares to renting. If you are not able to pay for a property directly, many buyers usually take out a loan, which you pay off gradually.

Repayment calculator: Calculating processes

With a repayment calculator you can calculate this process well in advance. For example, you will be calculated how high the installment and the remaining debt of the debit interest. Furthermore, you will be provided with a repayment schedule, from which you can see month by month how much of your remaining debt will be paid. With the interest calculator, you can calculate different loan offers from good banks and compare directly. You will be given the term, the effective interest rate and the remaining debt, so you are prepared for what bills will come to you. It’s calculate, calculate, calculate – to get the dream property!

What is your monthly repayment rate?

Find out for free what monthly rates you should expect:

• Repayment calculator

Budget calculator: possibilities

Now it is hardly possible to plan a period of up to 25 years in advance with any certainty. There are many life events that can occur unexpectedly and upset the planning. Nevertheless, solid financing is possible if you do not overstretch yourself with the loan and allow for a buffer. Equity also plays a very important role in the budget. In addition, there are life events that can definitely be planned for. These include professional qualifications or the birth of a child. Include these areas of life in your planning. A budget calculator is helpful if you want to bring order into your finances. If the calculator determines a possible loan amount, you should not overdraw it. Only then will you have a good chance of completing your financing safely over the course of years or decades.

Use budget calculator correctly

The budget calculator uses your income to determine the value that remains each month after deducting all costs. You enter your earnings and subtract all running costs and fees. If you want to get an authentic result, it is important that you enter all items realistically. It won’t help you if you gloss over your income or deliberately keep costs low. Rather, the opposite should be true. Calculate very generously by rounding up all items. Then build in a buffer. 25 percent is realistic. Also, keep in mind that as a homeowner, you need to build reserves. Costs incurred for repairs will have to be borne by you alone. A monthly savings rate should therefore also be included in the budget.

Allow for buffers

The buffer serves to secure the rates if an unforeseen life situation should occur. This could be an illness or unemployment. You can’t plan for these things, but you can’t rule them out either. If you have or want to start a family and are planning to build a house or buy a property, taking out term life insurance is very important. If one partner passes away at an early age, you will get paid the sum insured. Ideally, this should be high enough to repay the bank loan and any development loan taken out. This makes it possible for the surviving spouse to keep the house. Once you have entered all the expenses, you will be left with a monthly amount. You can use this for the construction financing.

Determine construction financing with the help of the budget calculator

The amount that you can invest in your construction financing after deducting all costs is the same as the monthly rate with which you service the loan. However, it is a prerequisite that you have also entered the ancillary costs for maintaining the house. These include the costs for the energy suppliers, property tax, waste charges and fees for the chimney sweep.

Use a loan calculator to determine a loan amount from the remaining amount. Use the calculator by entering the open amount determined by the budget calculator as a monthly rate. Research the current interest rates and fees for taking out a home loan and enter the values accordingly. You will be shown an amount that you can use for construction financing. Then find out what kind of property you can buy or build for that amount.

Calculator at a glance

Calculator – Exact planning of the construction financing

Calculators are necessary in relation to construction financing to accurately determine the cost of buying or renovating a property. A calculator is also used to determine the cost of the loan. The credit costs are composed of the interest and the repayment portion for the current loan amount. The interest plays an important role. Since the term of a real estate loan is usually ten years, the interest payment is spread over a long period. If an offer from a bank is only half a percentage point cheaper in their interest, you can already save several hundred euros a year. This is also due to the high loan amounts, which for most construction financing a six-digit amount. Before taking out a loan, an individual consultation is important. Often the construction financing consists of several pillars and not just a single loan. A building savings contract, equity capital and development loans come before taking out the classic bank loan. The reason for this is that these financings are significantly cheaper than the bank loan in terms of their costs. The calculator helps you to divide the financing into different elements and thus determine the costs with certainty.

• Learn more about the calculator.

Offer comparison calculator – advice & options

The offer comparison calculator is an important tool when it comes to choosing a partner for taking out construction financing. Many builders are dependent on taking out a classic loan at a bank or savings bank, because the funds from the equity, a building savings contract and a subsidized loan are not enough. Although the comparison possibilities of the indication by the Internet are very simple and transparent, many owners trust only in the offer of their house bank.

• Learn more about the quote comparison calculator.

Interest calculator – Construction financing

The interest rates are a very large item in a construction financing. It is recommended that you compare the various offers and conditions well in advance. In this way, you will find out which construction financing is particularly favorable. Since the interest is a very large part of the monthly loan payment, especially in the first years of real estate financing, it is important that you try to save costs.

• Learn more about the interest calculator.

Purchase additional costs calculator – Relaxed to the house possession

The ancillary purchase costs are very often neglected in the context of construction financing. At the latest during the financing discussion and the discussion of the financing offers, the ancillary costs are then put on the table. Many builders and real estate buyers calculate only with the price for the construction of the house and the outbuildings and the design of the garden. However, depending on the size, location and features of the property, the service charges can account for quite a large percentage. Often a five-figure sum comes together, which is due with the move into the house.

• Learn more about the ancillary purchase cost calculator.