Make sure you get one of the cheapest interest on mortgage lending! For many people, the desire to have their own home comes first when it comes to their wishes for the future. Most of the time you have to think about home finance long before – right! You should start financing your home early, and yet you can hardly get around taking out a loan for your own home. Nevertheless, saving in time is the order of the day, because most banks require an equity ratio of 20% in order to grant you a loan for your property and thus get you home finance. This rate of 20% should definitely be reached before you bother to find a suitable home.
If you find a suitable property at an adequate price, it is now up to you to take care of a building loan. This is where the question of interest on the construction loan comes in, because these can sometimes fluctuate greatly from bank to bank, despite the fact that, in the current situation, construction financing is cheaper than ever before.
For home finance with top interest
When it comes to mortgage lending, it is crucial to have a credit rating. The interest rate for home financing is often based on the credit rating. For example, someone who earns well and has a secure income and thus a good credit rating can often get lower interest rates. As a result, borrowers with lower incomes often pay higher interest rates. How does this injustice come about when it comes to building interest? Quite simply: the bank has a lower default risk with a borrower who can have a secure salary and a good credit rating than with someone who wants to apply for mortgage lending. However, interest rates do not depend entirely on the credit rating of the mortgage borrower.
Building interest: mortgage lending limit and fixed interest period
The lending limits and the fixed interest period also play a role when it comes to home finance interest rates. A bank lending limit means a maximum limit at which banks can lend an object. For example, if the lending limit is 60% (which it does in most cases), the bank may only lend the property up to 60%. Most savings banks and banks have this guideline, with building societies the loan limit is often up to 80% of the property value. If you want a higher mortgage lending limit at banks and savings banks, this becomes expensive and has a direct impact on interest rates. This lending limit is one thing.
The second parameter for determining the interest rate for a building loan is the fixed interest period. If you are currently in a period with low interest rates, you want to secure this over a longer period. At this point, the fixed interest period applies. The longer the fixed-interest period for a building loan runs, the higher the interest rate. This is a means of the banks. A longer-term commitment creates a loss for the bank because it cannot adjust interest rates to a rising market – in this respect, this is shifted to the borrower and banks charge a premium of between 0.2 and 0.4%.