Mortgage lending in the country can take two different forms. A combination of equity and debt can be used to cover construction costs. However, it is also possible to finance the entire construction costs without the equity. It is important to plan the building finance in advance, as it should be ready when you are ready for the first step.
One should take the time to plan the mortgage. The first step is to look at your own finances. It must be determined how much equity is available for the construction. Ideally, this should be at least 20% of the total. The next step is to determine as precisely as possible what sum will be used for the construction. To do this, you should get estimates, which will still be valid when you are ready to conclude a contract. Then you can subtract the equity from the final construction sum and thus receive the sum that has to be financed.
Ideally, you should leave yourself a small cushion, because unforeseen expenses always occur during construction. It is advisable to estimate about 5% of the total. It is also important to check which fees and incidental costs are immediately deducted from the loan. These must also be added to the total from the outset so that it is fully available.
The advantages of home finance
The biggest advantage of mortgage lending is of course obvious. Few people in the country have the necessary capital to finance their own construction. With funding, however, many people will be able to build their own house. It is thanks to the construction loans that the dream of owning a home in the country can be realized today for a large majority of people.
Most construction loans are long-term. If the term is long, the monthly installments can be better controlled even with larger loan amounts. These rates may not be, or only slightly, higher than the monthly rent that you pay in a rented apartment. With the mortgage calculator, the exact monthly charge can be determined quickly.
Perfect home finance also offers the opportunity to sensibly install your own savings and government grants, so that the construction project can be carried out more easily. Construction finance is currently available in the country at low interest rates. This results in another advantage that you should definitely take advantage of if you plan to build your own home in the foreseeable future.
The advantages at a glance:
- Enabling the dream of your own home
- Long-term loans can better control monthly installments
- The mortgage calculator can easily calculate the burden
- Own savings and government grants can be sensibly installed with good planning
- Currently low interest rates
How can you finance a building without equity in the country?
A full financing without equity can bring a number of advantages. On the one hand, it allows you to start building houses at a young age before you have saved your own capital. So you can easily pay off the building loan at working age and then enjoy rent-free living in old age, which makes a significant contribution to old-age provision. Even if you have a certain amount of equity, it can still be cheap to let the bank take over the entire building financing. This means that your own capital remains untouched and is still available for emergencies or other projects.
If you are looking for financing without equity, you should in any case have an excellent credit rating. If you cannot prove such a credit rating, you will hardly find a bank that will finance without equity. It is also advantageous if the applicant has a permanent employment relationship with the highest possible monthly income. Total household revenue plays a major role in determining the amount of credit that can be granted by the bank.
For a building loan without equity, it is worth checking and comparing the offers of different banks. A home finance calculator can be an excellent tool for doing this, making it easy to determine which loan is cheaper.
The most important points at a glance:
- Fully financed by a bank (without equity)
- You need excellent creditworthiness
- Permanent employment is a great advantage
- Even at a young age, a house can be built and paid for in a relaxed manner over the course of life
- In old age you can rent-free living (pension)
- With low equity, you should still have full financing
- Money for other projects or emergencies
- Sum of total monthly income plays an overriding role
- Be sure to obtain and compare offers from different banks
- Use mortgage calculator to compare
These requirements are required for a building loan
To obtain a home construction loan, banks set a number of conditions that the borrower must meet in order for the loan to be approved. A good credit rating is one of the basic requirements. If there are negative credit reports, it is almost impossible to get funding. There are some internet banks that in some cases also issue a so-called “ loan”, which is also given without a credit check, but a look at the mortgage calculator shows that in such cases the cost of the loan is much higher. The easiest way to get construction finance is for employees who have a permanent job and who can also prove high income. The self-employed, on the other hand, find it much more difficult to find a loan and may even have to provide a guarantor.
To apply, you should have proof of income and, under certain circumstances, the employment contract. Documents on other investments can also facilitate lending. In addition, the plans for the property to be financed must be submitted with a detailed cost calculation. The more carefully and completely you prepare these papers for the loan, the faster the loan can be processed, so that you can get a permit quickly and start the construction project.
- The bank provides borrowers with a number of conditions that must be met in order for the loan to be approved
- Good credit is a basic requirement
- With negative credit reports, obtaining funding is next to impossible
- Internet banks without a credit check charge higher interest rates, which means higher costs
- High monthly income
- Permanent employment
- Have investments
- It is best to bring proof of income, employment contract and plans for the property with detailed cost accounting for the application (the more detailed, the better)