Determine maximum purchase price: Important factors

One of the most important steps in the purchase of a property, which is often underestimated, is the determination of the maximum purchase price of the property. In order to avoid unwanted surprises here, it is important to determine this before you start looking for a property. This usually involves sitting down with your bank advisor and going over your finances. You then show a certain amount of equity and the bank then gives you a corresponding loan. The amount of this loan depends on your creditworthiness (for this you have to submit a self-disclosure ), as well as on your equity to be presented. The loan-to-value ratio of the property and the monthly charge are also taken into account.

Equity X + Bank loan Y

These are the factors that matter:

• Credit rating
• Mortgage lending value of the object
• Available equity
• Monthly load

Let’s now go through the individual factors in a little more detail:

Credit rating: assets vs. liabilities

When your credit rating is checked, your assets and liabilities are mentioned and compared. If the balance is positive, i.e. your assets outweigh your expenses and liabilities, your chances of getting a loan are very good. And the higher this credit rating, the lower your equity investment. After all, the bank also wants your money back as soon as possible and wants to be sure to get it.

Assets are matched with liabilities

Mortgage lending value of the property: market value & fair market value

The mortgage lending value of the property is generally lower than the market value. The market value is the selling price of the house or apartment if it were sold at the present time. Therefore, the market value is also called ‘theoretical market value’. The mortgage lending value is on average 20% below this. In order to minimize the risk of loan default, banks base their lending decisions on the mortgage lending value and not on the market value.

Mortgage lending value = market value – 20%

Available equity: Dependence on the balance sheet

As a general rule, 20% equity capital is needed. As mentioned before, the exact amount of equity ultimately depends on your credit rating. The more positive your balance sheet, the less equity you have to show. So you can also invest with an equity of 10% or 15% already in a property.

The better the credit rating, the less equity capital

Monthly load: income & expenses

The last important factor that influences the financing and thus the maximum purchase price is your monthly burden. Similar to the credit check, income and expenses are compared here. This is important for the bank, as it allows them to set the conditions for repayment, interest and redemption.

Conclusion: Determine maximum purchase price & financing

So, in addition to your credit rating and available equity, your monthly financing and loan-to-value also matter. This way, you can not only determine the maximum purchase price before you start looking for real estate, but also determine the terms for repaying your loan.

Buying real estate: Learning from A-Z

If you want to learn even more about the maximum purchase price, stop by our guide:

• Purchase price height (external)

â A guide â all the facts â insider tips â buying checklists to the questions that real estate newcomers have when buying the apartment: Owner-occupancy or rental, financing a condo, apartment hunting, real estate portals, realtors, appraisal, purchase prices, negotiations and taxes. Knowledge and experience from experts, in one guide. Learn step by step the process of buying an apartment and many insider tips!

• Buy apartment

Owner-occupancy: buy rented or unrented?

So let’s assume you want to purchase the property for owner occupancy. That is, you want to buy your property, move in there directly and maybe even redesign it as the case may be. In this case, an unrented property is best suited. You save time, because you do not have to give notice to any tenant, as well as costs and effort.

Advantages with non-rented property: less costs, time and effort

But what do you do when you have found the property of your dreams and it is rented? Then you need to give notice of your own needs.

Termination of own use: Legal deadline, exceptions & Co.

Tenants may therefore be given notice of termination if they require the property for their own use. The only requirement here is to observe the statutory period of 3 to 9 months for terminating a tenant’s own use.

In addition, you must provide comprehensible reasons why you need the house or apartment for personal use. This is also possible if a beneficiary needs to move in for urgent reasons. The mere desire to move in personally is therefore not sufficient. Exceptions also apply in the case of illness, old age or single parents.

Reading tip: Notice of termination of own use

Rented vs unrented for capital investments

If you acquire a property as an investment, both rented property and non-rented property bring their advantages and disadvantages.

Buy rented: No new leases or vacancies

If you want to buy a property that is already rented, this definitely offers some advantages. You don’t have to look for new tenants and thus avoid the risk of a vacancy. Also, the seller can give you some information about the payment behavior of the tenants. At the same time, renting also means that you have to take over all rental agreements. This includes those that are worded incorrectly.

Here again the advantages at a glance:

• No new lease necessary
• Tenants are already known
• Low risk of vacancy

Buy unrented: Current lease and market price

If you buy a property that is not rented out, you will initially have to reckon with vacancies, but you can also renovate and refurbish the property again directly if necessary. You can also formulate your own rental agreements here and can rent out the property for a current, market rent. Speaking of which: renovation work that serves to increase the value of the property is tax deductible – another plus point!

So, you can enjoy these advantages when buying a non-rented property:

• Market price for new rentals
• Independent drafting of a lease agreement
• Enough time for renovation work

Bottom line: should you buy rented or unrented?

When answering this question, it depends not only on the purpose and goal of the property, but also on which advantages can be best combined with it. Would you prefer to move into the new property quickly? Then a non-rented property is associated with significantly less time, cost and effort. If the house or apartment is an investment, you must decide for yourself which next steps are most likely to suit you.

Tip. You can find more advantages and disadvantages of rented and non-rented properties on my new project for real estate buyers (Immobilien-Erfahrung.de):

• Buy rented vs unrented? – external

Real estate marketing at a glance

• Via the Internet simply through portals
• Nevertheless, call in brokers for competent advice

Want self, owned reach instead of monthly advertising costs? Read more about our strategies here:

• Advertising agency for real estate agents

Overview of the circuit diagram

• Recording the circuit of a building
• Graphical symbols of electrical engineering as explanation
• If the circuit is changed, drawing in the circuit diagram
• In English – “wiring diagram “

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Mold overview

• Arises due to high humidity, incorrect ventilation and heating
• Penetrates through damaged masonry
• Mold secretes toxic substances
• Contact a specialist in the event of mould growth
• In English – “mildew”

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