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

Cryptocurrency explained: Blockchain, Investments & Co.

Cryptocurrency is nothing more than digital money. Here, all the important data around the holder and transaction is encrypted and stored. Instead of storing all this on just one server, the transactions are found in a decentralized network – also called: The Blockchain. This technology makes transactions faster, more secure, and less expensive than they would be otherwise. Sounds like the future? Read our analysis here: cryptocurrency development.

No investment advice or purchase recommendation!

All information provided here does not constitute investment advice or a recommendation to buy. All statements are my general published opinion. I have obtained the information from my experience as a private investor. This experience report cannot and is not intended to replace personal investment advice from professionals.

Owning and trading cryptocurrencies brings many advantages. Transactions take place directly between the buyer and seller. It is a decentralized network. So, unlike a bank transfer, exchange and bank fees are eliminated, as are transfer limits and unnecessary waiting times. Bitcoin trading is therefore not only uncomplicated, but also anonymous and secure. Instead of the own name, all crypto assets are managed with an identification code. The blockchain technology also ensures that transactions are constantly checked in advance, making any manipulation and forgery almost impossible. Learn more about the technology, course and trade explained here: BitCoin, cryptocurrency & blockchain.

Reading tip: Which app do I use to buy and sell shares, cryptocurrency & Co. Here is the answer! My recommendation: Trading App.

Trading has never been so easy! Buy from 1 euro with these apps:

Download (Android + iOS): eToro

And a little tip, Made in Germany:

Download (Android + iOS) Trade Republic

Trading with Bitcoin, Ethereum, Litecoin & Co.

The cryptocurrency Bitcoin is now a household name. It is the most popular, but by far not the only one. In the meantime, several new creations have emerged. Some of the others are Bitcoin enhancements. Thus, there are now over 4,500 cryptocurrencies. While that sounds like a large amount, only just under 100 of them achieve a daily trading turnover of $1,000 or more. Other popular cryptocurrencies are Ethereum, Ripple and Litecoin.

Cryptocurrencies – List

Here you can find a selection of interesting digital currencies:

Binance Coin (BNB)

• Binance Coin (BNB)

Bitcoin Cash (BCH)

• Bitcoin Cash (BCH)

Bitcoin (BTC)

• Bitcoin (BTC)

Cardano (ADA)

• Cardano (ADA)

Dash

• Dash

EOS

• EOS

Ethereum

• Ethereum

Ethereum Classic (ETC)

• Ethereum Classic (ETC)

IOTA (MIOTA)

• IOTA (MIOTA)

Litecoin (LTC)

• Litecoin (LTC)

NEO

• NEO

Ripple (XRP)

• Ripple (XRP)

Stellar (XLM)

• Stellar (XLM)

Tezos (XTZ)

• Tezos (XTZ)

TRON (TRX)

• TRON (TRX)

ZCASH (ZEC)

• ZCASH (ZEC)

Questions and answers: cryptocurrency

So now you know what the blockchain technology is, what cryptocurrencies there are and what advantages trading Bitcoin and Co. brings with it. Finally, you will get all the important questions about trading with cryptocurrencies answered:

Which is the best cryptocurrency?

The best cryptocurrencies include the classic Bitcoin, as well as IOTA, Ripple, EOS, Litecoin, Binance Coin and Tether.

Which cryptocurrency has a future?

According to forecasts, Bitcoin, Ethereum, Ripple and NEO have the most potential to increase in value in the future.

Are gains from cryptocurrencies tax-free?

The speculation period for cryptocurrencies is one year. If a profit of 600 euros or more is made during this period, the total profit must be taxed. So if the coins are left in the wallet for at least 12 months and only paid out after the speculation period, no taxes are due.

Should you invest in cryptocurrency?

Only invest in cryptocurrency if you are familiar with blockchain technology, different currencies and wallets. After all, this is a decentralized network based solely on demand. So always be aware of the risks and only invest if you are really sure and familiar with cryptocurrency trading.

Cryptocurrency: reading tips

1. Trading App: Recommendation
2. Trading strategies

Trading App: Recommendation

eToro App – Trade stocks, ETF, cryptocurrency, in my blog you have already learned a lot about trading. Lots of questions of course: which app do you trade with, what do I recommend? So today I want to share with you my favorite trading app, eToro. 29.88% asset growth in 12 months, with low risk through “Copy People” and “Copy Portfolios” or up to 127.35% through active trading and trading strategies. Learn about the app, fees and more here step by step.

• Trading App

Trading strategies

Whether it’s crytocurrency, currency trading, stocks, commodities or precious metals, these 3 strategies will help you understand the basic stock market game. I developed these 3 strategies to help beginners and novices understand the mechanics in a nutshell. Since I grew up with Bitcoin rather than stocks, here in particular a strong reference to digital currencies. But the mechanisms or strategies are the same for these 5 investment types: crytocurrency, currency trading, stocks, commodities or precious metals. I would exclude ETFs and index funds, as the risks and price fluctuations are significantly lower here.

• Trading strategies

Did you already know? Open transactions in the blockchain

Cryptocurrency itself is, simply put, a coded chain of data. The so-called blockchain.

How does cryptocurrency work?

Everything is set up as a P2P network (peer-to-peer). Data is therefore stored in a decentralized manner. All data blocks are linked to that of the predecessor. Within this distributed database, all transactions are actually known!

The whole thing is therefore a network in which cryptographically signed messages are published – technical term: blockchain. You want to have a look at these transactions? Here you can see live how individual trades sometimes sell up to 100 Bitcoins and how sums in the millions go over the table:

• Bitcoin transactions – live on blockchain.com
• Ethereum transactions – live on blockchain.com

Interior fittings also determine the value of the house

Large investments in the interior of the house have a value-increasing effect when selling. If you are planning to sell a house, your investments will be taken into account in the exposé. Many prospective buyers prefer to purchase a home that requires little or no renovation work. It is important that potential buyers get a transparent picture of the property. Opt for a stress-free sale where you get a fair market price for your property.

Technical installations: heating, water, electricity

In the course of the interior construction, all technical systems in the house are installed. This includes the heating system with all pipes and the radiators, which are integrated in every room. If you have opted for underfloor heating, this will be integrated into the rooms according to your specifications. The water circuit is installed in a smaller area of the house. It includes the kitchen, bathroom, toilet and, if required, rooms in the cellar or the utility room. A water connection in the garden can also be laid if desired.

Installation of lighting system and socket circuit

The installation of the electrical system is a very important part of the interior design. This area includes the lighting system and the socket circuit. In new buildings and extensive renovations, additional wiring is laid for the installation of a network. In all rooms there are sockets where stationary devices can be connected to the network. It is no longer necessary to lay cables. The cabling is connected to the router so that access to the Internet is guaranteed at all sockets.

Design of ceilings, walls and floors

After the construction of the house, the walls are in an unplastered state. In a first step, they must be plastered or smoothed with plaster. Only then is the design with paint or wallpaper. The ceiling can also be wallpapered or painted after the plaster has been applied. Alternatively, a design with wood or with panels is possible. Opt for a uniform look throughout the house or choose an individual design for all rooms. There are no limits to the creativity of the builder.

Individual floors: wood, carpet, laminate

An individual design of the floors is also possible. Besides classic carpeting, wood is very popular. Plank flooring is available in light and dark woods. Many builders choose parquet. It consists of small sticks. Real hardwood is used as the material. A sealant makes the parquet easy to maintain and very robust. A cheaper alternative to parquet is laminate. There are variants made of real wood and plastic. You can choose from many different colours. So you can adapt the design of the floor very well to the interior.

Further information on the subject of house building

Here you will find further information and tips on the subject of house building.

Building materials: concrete, wood, stone, glass and plastics

Building materials are indispensable for the new construction of a house, but also for the renovation. Materials such as wood, stone and concrete are predominantly used. But plasterboard, glass and various plastics are also used. Building owners can influence the type of building materials. Basically, it is important that you pay attention to high quality. It doesn’t matter whether you are overseeing the construction of a new house or opting for the renovation of an existing building. The building materials used are usually used for decades. They are exposed to a very high degree of stress, both on the outside and inside. When using building materials that have qualitative limitations, minor renovations are often necessary at short intervals. You can prevent this by selecting high-quality building materials.

• Click here for the article Building Materials.

Energy and technology: Energy efficiency in technical installations & security systems

Many value-adding components of a house fall into the area of energy and technology. If you wish to sell your property without stress, we as real estate agents are happy to offer you our individual services. This also includes the preparation of an exposé. This serves to describe your property to all interested parties who respond to the advertisement.

• Click here for the article Energy and Technology.

Financial investments: savings account, call money and time deposit account

In addition to traditional savings accounts, you can also opt for securities as an investment. The interest rates are higher. The disadvantage, however, is that you cannot count on the money so well. You do not know in advance how the interest rates will develop, because they depend on the prices on the capital markets. In contrast, the classic investment of money in the form of a savings account, a call money or a fixed-term deposit account can be calculated exactly in advance. However, the interest rate can be significantly lower than if you invest in shares or securities.

Pay attention to the availability of the investment

If you have saved reserves for the purpose of construction financing, it is advisable to coordinate the investment of funds with your planning. This applies in particular to investments in securities and fixed-term deposits. The capital will not benefit you if it is not available on the due date. If you liquidate cash investments prematurely, you will often lose some of the interest or be charged fees.

Investing money from the sale of real estate in a financial investment

Similarly, you can transfer money you receive from a property sale into an investment. This is possible in the short or long term. Since most banks no longer pay interest on funds held in a current account, it is advisable to transfer funds that are not needed immediately from the current account to an investment. With the large amounts you get for selling a property, even low interest rates have a positive effect and you can make a positive profit. If you would like individual advice on financial investments to be used in connection with the sale or purchase of a property, we would be pleased to offer you our services.

Investment in shares and securities

Shares and securities are considered a flexible and very profitable investment. You can buy individual shares, or you can decide to invest in a fund. In this case, different shares are grouped together. The fund is managed by experts. In principle, you can buy or sell shares at any time at the current daily price. However, always keep an eye on the development of the increase in value. Also take into account that the securities account is subject to charges at many credit institutions. Furthermore, the purchase price of a share is higher than the issue price.

Value development: consider risk in calculation

In contrast to a classic savings investment, the performance can go down as well as up. You should also take this into account in your calculation. Compared with other financial investments, you can achieve the highest returns by investing in shares and securities. However, this may take some time. Knowledge of the market is an advantage. If you want to save money for a construction loan, stocks and securities are only a good choice if you plan for the long term. Short-term gains are theoretically possible. However, unlike the classic fixed investment, they cannot be planned.

Fixed investments with classic interest rates

A fixed-term deposit has a specific term. The interest rate is also fixed, so you know in advance how much money you will have available at the end. This is an advantage for construction financing. The disadvantage is that interest rates are at a consistently low level. This is especially true for cash investments with a short term. Also take into account that you usually do not have access to the money during the fixed period. You can terminate a fixed-term deposit in the normal way. However, you must observe notice periods of up to a quarter of a year and you will lose part of your interest.

Per diem account: Advantages, disadvantages, interest

You should only deposit money in a call account if you need it at short notice or do not know exactly when the withdrawal is necessary. Overnight deposit accounts are often linked to the current account. Transferring the money and returning it to the checking account usually takes one banking day. The advantage is the immediate availability of the money. The disadvantage is the low interest rate.

Real Estate Loan

A construction loan differs from the classic consumer loan by the more favourable interest rates and the longer term. The property serves as collateral for the financing. The debt is entered in the land register. If the instalments cannot be serviced on time, the bank has the right to terminate the property loan and pursue foreclosure. In this case, it gets back its money or a large part of it. Thanks to this deposited collateral, the bank has the possibility to grant more favourable conditions for real estate financing than for a consumer loan granted without the deposit of collateral.

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