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

Lukinski Real Estate Tools – App #1

It all started with this app or idea at Christmas, two months later the app (v.1.0) is ready and in the App Store!

The idea: Real estate app for beginners

There are thousands of apps for nutrition, thousands for sports, millions for gaming, and only a handful of real estate apps, mainly for apartment hunting.

Then at Christmas I had the idea: I build very simple real estate and financial calculators for beginners. The Lukinski Immo Tools App. Example: You can explain a repayment plan (interest, repayment, loan installment, unscheduled repayment) in a complex way in guidebooks with a thousand words or just show it. My teacher in business school used to say: “Don’t bring fish to the ‘poor’, give them a fishing rod”, a simple quote from the south of Bavaria, but containing a lot of truth. “Learning by doing” would also be apt. See our Real Estate Munich.

15+ small calculators for equity, savings plan (reserves), amortization schedule, incidental purchase costs by state, real estate transfer tax, realtor costs and much more!

The real estate app for beginners with the goal:

1. Build equity
2. Find cheap property
3. Buy real estate (as an investment)

New functions of the real estate app

In the coming weeks and months, I will refine the calculators and build new calculators, also for owners. Already now you can find in the app also the co-ownership calculator (purchase of a condominium > part of an owners association) or also living space calculation, functional area and much more, all according to DIN 277 and WolfV.

Download from App Store

Here you can find the free real estate app in the stores:

Free of charge in the App Store!

You can also find out more about the app and the calculators here:

• Lukinski Immo Tools App

Lukinski Villas App: Vacation Property & Investment – App #2

Vacation property or investment (live and rent or rent only), in the Lukinski Villas app you can now find a selection of gems in Ibiza, Marbella, Los Angeles, Miami (and more places).

On my travels, especially in the Spanish-speaking world, I make more and more contacts. Some of them lead to the real gems: Villas in Ibiza, Marbella, Los Angeles (and other hotspots). With the Lukinski Villas App you can discover a few of these gems, as a vacation property or as an investment (live in and rent out or just rent out).

Download from App Store

You can find the free Villas app in the stores here:

Free of charge in the App Store!

You can also find out more about the app and the Villas here:

• Lukinski Villas App

Real Estate Experience App: Learn Investment – App #3

How do you learn to “buy a property”? The best way is with the Immobilien-Erfahrung.de app. 30 steps, constructed by our expert, to the first property.

In addition, in the app you will find the entire wiki with over a thousand technical terms, explained simply and understandably.

Download from App Store

Here you can find the free real estate app in the stores:

Free of charge in the App Store!

You can also find out more about the app and how to become an investor here:

• Real Estate Experience App

FIV Magazine App: Fashion & Real Estate Magazine – App #4

Already over 25 issues of FIV Magazine, my little media baby of the 90s, my “little Vogue”. All issues are now available for free with all covers, interviews in the FIV Magazine App.

Download from App Store

Here you can find the free real estate app in the stores:

Free of charge in the App Store!

You can find out more about the app and the magazine here:

• FIV Magazine App

Lukinski Check

In my comparison portal you will find the most important topics and good providers. For your construction financing, follow-up financing and much more! Secure good conditions with my Provider Check 2023:

• Comparison

Financing: a comparison of providers

The A&O in real estate investment: Affordable financing!

• Building society savings contract – build up equity
• Construction financing – Favorable interest rates
• Follow-up financing / forward loan
• Installment loan – For small renovations & co.
• Rental deposit – The first rental apartment

Investment: comparison of providers

Building up equity means saving and investing money. Here are my tips:

• Current account – Safekeeping money
• Depot – Invest money
• Call money – putting money aside for the short term
• Fixed-term deposits – putting money aside for the long term
• Roboadvisor – investing money (automated)

Ownership: insurance and sale

Finally, 2 practical comparisons for real estate owners:

• Household contents insurance
• Partial sale

Saving teaches you how to get rich!

What does that mean? Simply put, every euro you save in interest, for example, can be directly reinvested by you as a smart investor. Each euro corresponds to ~ 20% equity for the first, second real estate purchase. So with a loan, 1 euro becomes 6 euros that you can invest. Saving 100 euros in interest = 600 euros more equity, 1,000 euros = 6,000 euros more equity, etc.

Example:

• 100,000 euro loan at 2% interest
• 1st year = 2,000 euros interest costs
• 2nd year = 1,960 euros interest costs
• …
• 39,130.36 Euro interest costs !!!

Insight:

• It pays to compare offers / providers
• Interest is cost factor #1 after the purchase price of the property

Tip! Use the repayment plan calculator (below) to check for yourself how much interest you will be charged each year with only 2% interest costs.

Repayment plan example: 2% for a term of 35 years

Here is an example of financing at 2% over a term of 35 years.

Compare as many offers as possible – Tip 1

If you want to take out a loan for the construction or purchase of a property, it is worth comparing offers from different banks and credit institutions. There are various interest rate calculators on the Internet that allow you to compare the interest rates of different providers. You can also contact the banks and credit institutions directly to receive offers.

It is important to compare as many offers as possible to find the best interest rate for you. The more offers you compare, the greater the chance that you will find an attractive interest rate. Also compare the conditions of the different providers, such as the fixed interest period, the unscheduled repayment options and the repayment conditions. That way you can choose the best offer for you.

Comparison tip summarized:

• Compare as many offers as possible from different banks and credit institutions
• Use an interest rate calculator on the Internet or ask the provider directly.
• The more offers you compare, the greater the chance that you will find an attractive interest rate

Also compare the terms and conditions of the various offers (more on this in a moment), such as the fixed-interest period, the unscheduled repayment options and the repayment terms.

Construction financing: provider comparison

Check current conditions online, right here:

• Construction financing in comparison

Consider the fixed interest period – Tip 2

The fixed interest period indicates how long the construction interest rate remains guaranteed. For example, if you choose a fixed-interest period of 10 years, the construction interest rate remains constant for the duration of 10 years. After the fixed interest period has expired, the interest rate may change and adjust to the current market interest rate.

There are advantages and disadvantages to different fixed-interest periods. A longer fixed-interest period can be somewhat more expensive, but it also offers more planning security. You know exactly how high the monthly installments will be for the duration of the fixed-interest period and can plan your finances accordingly. A shorter fixed-interest period, on the other hand, can be more favorable, but is also associated with a higher risk, as the interest rate can rise after the fixed-interest period has expired.

When deciding on a fixed-interest period, you should therefore consider whether you are more interested in planning security or in the lowest possible interest rates. You should also compare the interest rates for different fixed-interest periods with different providers to find the best offer for you.

Interest rate lockup summarized:

• Fixed interest period indicates how long the construction interest rate remains guaranteed
• Longer fixed-interest period offers more planning security, but is also somewhat more expensive
• Shorter fixed-interest period is more favorable, but also entails the risk that the interest rate may rise after the fixed-interest period has expired
• When selecting the fixed-interest period, consider whether you are more interested in planning security or in the lowest possible interest rates.

Compare different forms of interest – Tip 3

There are different forms of interest that you can choose when financing your construction. The most common forms of interest are:

1. Fixed interest
2. Variable interest
3. Combined interest

Fixed interest

With fixed interest rates, the construction interest rate remains constant throughout the term of the loan. This provides planning security, as you know exactly how high the monthly installments will be. However, fixed interest rates are usually somewhat more expensive than variable interest rates.

Variable interest

With variable interest rates, the construction interest rate can change during the term of the loan. It is adjusted to the current market interest rate. Variable interest rates can be more favorable than fixed interest rates, but also offer less planning security, since you do not know exactly how high the monthly installments will be.

Combined interest

Combined interest rates are a combination of fixed and variable interest rates. One part of the construction interest rate remains constant throughout the term of the loan and the other part is adjusted to the current market interest rate.

Each form of interest has its advantages and disadvantages. Compare the different options to find the best form of interest for you. Also consider your personal preferences and your financial possibilities.

Consider the unscheduled repayment options – Tip 4

Unscheduled repayments make it possible to repay the loan early and thus save interest. There are various options for unscheduled repayments, such as:

1. One-time unscheduled repayment
2. Regular unscheduled repayments

One-time unscheduled repayment

A one-time unscheduled repayment allows you to repay the loan once in full or in part. This can be useful, for example, if you suddenly have a larger sum of money at your disposal, for example due to an inheritance or the sale of a property.

Regular unscheduled repayments

It is also possible to make regular unscheduled repayments, for example monthly or annually. In this way, you can repay the loan faster and thus save interest.

When selecting a mortgage, consider the unscheduled repayment options offered by the various providers. Compare whether and how much unscheduled repayments are possible and whether there are any fees for unscheduled repayments.

Use comparison portals – Tip 5

There are various comparison portals on the Internet that allow you to compare construction interest rates from different providers. These portals usually also offer various filter functions that you can use to narrow down the search according to your preferences, for example, by fixed-interest period, interest rate or repayment conditions.

The comparison portals can be a good way to quickly and easily get an overview of the various construction interest rate offers. However, you should note that the comparison portals usually do not take into account all providers and conditions and that the offers may not always be up to date. It is therefore advisable to check the offers directly with the banks and credit institutions.

Exactly right! Click here for the provider comparison

Check current conditions online, as always 24/7 here:

• Construction financing in comparison

Use the offers of intermediaries – Tip 6

Intermediaries are specialized service providers who can help you find a favorable construction financing. They compare the offers of different banks and credit institutions and advise you on the best financing for you. Some brokers also offer exclusive deals that can only be obtained through them.

The services of intermediaries are usually subject to a fee. However, they can save you a lot of time and effort in the search for a favorable construction financing and also arrange better conditions for you. It is therefore worth considering the offers of intermediaries. However, also find out about the conditions and fees of the intermediaries to make sure that they are actually advantageous for you.

Consider other financing options – Tip 7

In addition to banks and credit institutions, there are other ways to raise money for the construction or purchase of a property. These include, for example:

1. Building savings
2. Building society loan
3. Promotional loan
4. Personal loans

Building savings

Building savings is a form of long-term investment in which you deposit money regularly and receive interest and tax benefits in return. The money saved can be used for the construction or purchase of a property if required.

Building society loan

A home savings loan is a loan granted on the basis of your home savings contract. You do not have to provide any collateral and can usually benefit from favorable interest rates.

Promotional loan

There are also various development loans offered specifically to builders or homebuyers. These loans are usually more favorable than conventional bank loans and are provided by the federal government, states or municipalities. However, there are usually certain requirements that must be met in order to receive a development loan.

Personal loans

It is also possible to take out a loan from friends or relatives. This usually brings you favorable and sometimes flexible conditions, for example, if you can not pay an installment on time.

Negotiate the construction rate – Tip 8

It is not uncommon for banks and credit institutions to have a certain amount of leeway when it comes to construction interest rates. It is therefore worth negotiating the construction interest rate and asking for a reduction.

There are several factors that play a role for banks in evaluating creditworthiness that can affect the construction rate. These include, for example:

1. Credit rating (creditworthiness)
2. Amount of the credit
3. Fixed-interest period
4. Type of property

Credit rating (creditworthiness)

Your credit rating indicates how likely it is that you will be able to repay the loan. As a rule, the higher your credit rating, the lower the interest rate.

Amount of the credit

The amount of the loan can also influence the construction interest rate. As a rule, the larger the loan, the higher the construction interest rate.

Fixed interest period (mentioned above)

As already mentioned, the fixed interest period indicates how long the construction interest rate remains guaranteed. A longer fixed-interest period is usually more expensive than a shorter one.

Type of property

The type of property can also influence the construction interest rate. For example, construction interest rates for single-family homes are usually more favorable than for multifamily homes or commercial premises.

Take these factors into account when negotiating the construction interest rate and try to present your arguments well. It is also worthwhile to obtain offers from several banks and credit institutions and compare them with each other. This way you can find out who is willing to reduce the construction interest rate.

Start construction planning?

Here you can find good conditions in comparison:

• Construction financing check