If you want to buy a property or build a house, you can only rarely pay the high costs out of your own resources; a real estate loan is the solution. A real estate loan is also referred to as a construction loan, it is characterized by a high sum and a long term. It is important that the real estate loan is thoroughly planned.
A real estate loan can be used with and without equity, but using it without equity is a high risk and does not make sense, as the loan amount is immensely high. Equity is a security, so a share of equity should not be missing in construction or real estate financing.
The mortgage loan as a mortgage loan
The real estate loan is by definition a financing for the construction, purchase or renovation of a property.
A real estate loan is usually used as a mortgage loan, which means that the property is registered a mortgage and the loan is secured by a mortgage.
If the borrower is in financial difficulties and can not pay the real estate loan installments, the bank can foreclose the property and then use the proceeds of the foreclosure sale.
For the borrower, the mortgage loan has the advantage that the interest rates are comparatively low. Mortgage loan real estate loans require notarial certification, which costs money.
Thoroughly plan a real estate loan
The real estate loan calculator, which is available for free on the Internet, is used for planning purposes. With the calculator you can plan real estate or construction loans and play through several variants. It indicates the amount of equity that is to be used for the purchase of the property or the construction of the house, as well as the desired loan amount and the term to. Since a real estate loan is a loan with a very high sum, a fixed interest period is usually fixed in which the borrowing rate does not change.
For the real estate loan one can set the duration of the debit interest period. The mortgage interest rates are used as an average, the calculator shows the amount of monthly installments for the real estate loan. You can calculate the real estate loan and finally, if you have found the cheapest option, create a repayment plan. This repayment plan extends to the end of the debit interest period. In order to finally find a cheap real estate loan, it is important to compare the interest rates at the individual banks.
Compare is worthwhile
For real estate loans with a smaller amount you can use the real estate loan comparison on the Internet, it is available free of charge. The input fields are filled in with the loan amount and the term, in order to get a precise overview of the installments and the interest rates on real estate loans at the individual banks.
The comparison informs about the conditions at the individual banks, with one mouse click one reaches directly to the bank, in order to call up there further information and to apply for the real estate credit. The comparison informs about cheap real estate loans. If you want to apply for a real estate loan with a larger sum, the comparison on the Internet is usually not enough, but you can check online via various banks in advance and obtain there offers for the real estate loan.
This solution is also useful if you want to apply for the real estate loan without equity, because it requires a thorough consultation. If you have received offers from several banks, you can select the cheapest real estate loan and submit the application.
Secure interest rates with the borrowing period
In times of low interest rates, one can secure favorable interest rates for the real estate loan by setting the borrowing period particularly long, for example over 10 to 15 years. During this borrowing period, the interest rate does not change, so you can benefit in the long term of low interest rates in the long term from favorable interest rates. In the opposite case, one can choose the borrowing rate period in times of high interest rates over a short period of time then maybe get a follow-up financing with lower interest rates at the end of the borrowing rate period. If the debit interest period has expired, the bank submits a prolongation offer, with other interest rates and other monthly installments. Nevertheless, it is worthwhile to make a settlement in good time before the end of the debit interest period in order to secure favorable conditions for the residual debt in the real estate loan.
One is not forced to accept the extension offer for the real estate loan, since one can request a rescheduling with another bank and at the end of the debit interest period no prepayment penalty accrues. It is also possible to repost a real estate loan with a forward loan in order to secure favorable interest rates in good time before the end of the debit interest period, but it should be borne in mind that commitment fees are incurred until the forward loan is used.
Apply for a real estate loan
If you want to apply for a real estate loan, you can submit the application in writing or online. In the application for the real estate loan you give details of the loan amount, the term and the duration of the debit interest period, as well as information on the person and the property is required. If the application has been received by the bank, the bank will send you a corresponding offer for the real estate loan.
If you agree with the offer, you sign it and submit it to the bank by mail together with the required credit checks, which include proof of income, bank statements and a certificate from the employer. The identity of the applicant will be checked by the post-referendum procedure and the applicant will have to present his identity card or passport. The bank evaluates the creditworthiness of the applicant.
A real estate loan requires special collateral due to the high loan amount and the long term. The bank collects a credit bureau information about the applicant, the real estate loan can only be granted if there is no negative credit bureau entry. The interest will be determined on the basis of the applicant’s creditworthiness. If all conditions are met, the real estate loan can be disbursed.
Conclusion: The most important thing about real estate loans at a glance
- Real estate or construction loans are used for the purchase or construction or renovation of a property.
- The term as well as the loan amount are significantly increased compared to other loans.
- Therefore, the construction loan also special collateral, especially a share of equity capital, absolutely recommendable.
- For smaller construction loans independent online comparison calculator should be used; for larger sums it is at least advisable to use them as a first clue.