Planting a tree, giving birth to a child, building a house: some of these big goals are easier to realize than others, for example with a home loan. For example, the dream of owning a home often seems far away given the horrendously high real estate prices. However, a home loan can bridge the gap between dream and reality and make the desire for a home a reality. Here’s how to calculate and apply for a home loan. In addition, we tell you what you should pay attention to the home loan.

The home loan – a financing option for home builders

So that it does not just have to stay away from the dream home, banks offer special home loans to finance the home. These loans are both for the purchase or construction of a house or apartment and for the financing of a plot. The home loan, which is also called mortgage lending, is repaid over a relatively long period in monthly installments to the lending bank or savings bank. Since the repayment of the loan for a home may take decades due to the loan amount, it is important to carefully calculate the terms of the home loan, to accurately calculate the project and to consider the offer for a home loan in comparison.

Therefore, you should consult a loan calculator before buying a house. This way, you can use a special construction loan calculator to explore and weigh the conditions that are favorable for you in advance. In contrast to the classic installment loans, loans are granted to houses with a purpose bond, which means that the loan may only be used for the purchase of the property. In addition, the bank also secures against the default of the borrower in the granting of home loans. This usually involves a mortgage or a mortgage.

What is a mortgage when taking a home loan?

A land charge means that the buyer grants the lien a land charge. The bank can thus sell the property in the event of insolvency of the customer. As a result of these measures, the Bank reduces the risk of default, and as a rule it can provide home loans at more favorable interest rates than ordinary installment loans.

Apply for a home loan with no equity: is that possible?

The rule is that whoever contributes between 20 and 30 percent equity in the home loan receives from the bank for building a loan with the most favorable interest rates. In general, numerous real estate specialists advise against applying for home financing or home loans without equity, as the repayment charges would be too great. On the other hand, it is also not advisable to use the entire savings for the home purchase, because reserves for purchase and construction costs should always exist.

As a rule, these costs can not be covered by a home loan. The so-called full financing, ie a home loan without equity, as it is common in other countries such as the United States or Great Britain for years, is still becoming more popular in Germany. Some banks extend the entire purchase price of the house, so that the future buyer can finance the house, even if he can not spend any equity.

What is a full financing as a home loan?

At first glance, this concept seems very convenient and practical, but it also carries some risks. First of all: Not every prospective buyer can receive a complete financing. To obtain such funding, the willing buyer must have collateral and a solid financial position. This real estate financing is only available if the bank can be sure that the borrower will be able to repay very high loan installments in the coming years without any problems. Repayments of at least two percent are absolutely normal for full financing as the bank tries to compensate for the increased risk.

Additional costs for the calculation of the credit do not forget!

If you borrow a loan for building a house, it is not enough to borrow only the pure purchase amount. Buyers should also keep an eye on the additional costs: this includes groundwater taxes as well as notary and land registry costs. But also the brokerage commission and renovation costs or modernization costs must be covered. A home loan calculator can help you in this, in which amount the total amount, the respective rates and the repayment period can move.

How to calculate the sum of a home loan?

If you calculate the amount for the home loan, you must deduct your existing equity from the total purchase or construction costs including all ancillary costs. For their calculation, borrowers should not neglect the costs of relocation and new establishment, because the loan for the house these costs can not be covered. Alternatively, however, a special residential loan is available for this purpose, which again drives up the monthly monetary burden of the borrower. Also, such additional credit should be taken into account when calculating house credit.

Calculate the monthly installment for the home loan – How it works

Since the monthly repayment rate of a loan for the home construction usually has to be paid back over decades, the rate should be calculated in advance exactly, so you do not overburden financially, but also extend the term unnecessarily to infinity.

For this, it is best to make a house loan calculation in which you compare all regular income and expenditure. What remains after the deduction of all costs, corresponds to the maximum amount of the monthly rate. However, you should not fully budget this amount for the repayment of your home loan, but include a buffer for unexpected expenses in your calculation.

Interest on the home loan

For a home loan or a home loan, as for any other loan synonymous interest. Since the repayment usually takes a lot of time, a favorable interest rate, as currently on the German market, has a particularly positive effect on the total cost of the loan. Usual are fixed interest periods of five, ten or fifteen years. For some banks, it is even possible to fix interest on home loans for up to forty years.

What is meant by a debit interest on home loans?

Borrowers make a so-called debit interest when taking out the loan with the bank. This means that the interest rate is set for the fixed period of repayment. In this way, the customer is protected from short-term interest rate fluctuations and can, with a clear conscience, finance his house with the calculated home loan.

How are interest rates determined for a home loan?

The interest rates for home loans are also based on the equity paid: If you lend over 50 percent of the purchase price as a home loan, you must expect higher interest rates for many credit providers. When borrowing between 60 and 70 percent, between 0.05 and 0.1 percentage points are usually paid. At 80 to 100 percent, it is 0.2 to 0.8 percentage points, and in the case of full financing, surcharges are also possible from one percentage point upwards.

Follow-up financing: planning for the end of the home loan

Since home loans are given at very high sums, such loans are usually not fully paid off after the expiry of the borrowing rate. Following this, borrowers can and must negotiate a new contract with the bank, or even switch banks if necessary to continue financing at low prices. It is advisable to obtain information about a suitable follow-up financing before the end of the fixed interest period.