In order to inform you optimally about the application for building loans, we have worked out a building loan comparison with our finance team and experienced experts for a good overview. If you would also like to read more about the topic or are interested in specific aspects, you can find a comprehensive guide under the comparison. Find the best building loan for you now and apply for it online!
Building loans at a glance
- The building loan with life insurance or building society contract for investors
- The transparent annuity loan as a classic with secure interest
- For risk-conscious people, the building loan with quick repayment through shares
- The construction loan in foreign currency for the global player
Applying for building loans is easier than ever today – almost everything is now possible online and is becoming increasingly popular with consumers. Banks make it as easy as possible for themselves and those interested in credit today, because the low interest rate level almost forces the banks to lure with increasingly cheaper offers – but these are the crux of the matter. The large selection can often cause confusion.
What can be financed through the construction loan?
The building loan is a loan that is usually guaranteed by banks. An extension is the inclusion through the leading house bank at the Reconstruction Credit Institute , conceivable with energetic renovation when buying a house or energy-conscious new building. The building loan is always earmarked, so it will usually only be used for the new construction, conversion or purchase of a property. Of course, some banks also offer exceptions, so in some cases they also ensure modernization or restructuring measures.
What amounts are financed with a building loan?
The amount that the bank makes available depends heavily on the intrinsic value of your dream property and your personal creditworthiness. The framework therefore only sets your personal circumstances and your income, as well as the available share of equity.
What does a building loan cost?
In addition to the loan amount, the borrower traditionally also has to bear the interest costs. Depending on the creditworthiness, term and amount, these have been individually determined by the bank in advance for the construction borrower. But there is a lot more to consider.
A precise comparison and the determination of the building blocks from the “small print” are important in order to be prepared for a bad awakening in the event of an emergency. Factors such as a fixed interest period, of course the exact term, options for making special payments or an agreement on flexibility in payment by installments – such as a possible payment break – are important for a comparison of the various offers and conditions.
We would like to give you a few examples on these separate terms:
- Banks often record so-called commitment interest in their contracts. These arise when the loan is approved but not called up immediately. This can be the case in the case of payment after construction progress. This is often up to 0.25 percent, which is due in this case. A comparison of the deadlines is advantageous here, the more “free months” the bank makes available, the better.
- If the loan is made available but not called up and then terminated because the purchase of the property may not have come about, the bank can request compensation for the non-acceptance of the loan. So you should definitely let the bank explain the fine print in detail.
- If the loan is rescheduled during the term, there is usually a prepayment penalty. A comparison and, if necessary, renegotiation is also worthwhile here.
- If a home loan is taken out with the building loan, closing fees always apply. However, with this model, the costs are reduced overall, since the building society contract generates credit interest.
- However, no bank may charge fees for the appraisal or inspection of the property. Here, too, it is important to ask more precisely.
Apply for a building loan – how it works
As with a personal loan request from a bank, questions about the project, the desired property, your person and, of course, contact details are first asked without obligation when comparing online. It is very important to provide real facts and figures, which should be as accurate as possible before the data is sent.
As a rule, you will be personally advised on the telephone within 24 hours. This gives you the opportunity to clarify any questions about any uncertainties or to adjust the numbers.
Your individual information is then used to make a comprehensive and free comparison at numerous well-known banks.
The issuers then assess your creditworthiness and risk based on the figures provided. If your data is confirmed positively, you will receive a financing proposal tailored to your specific needs, which you can compare in peace.
If the financing proposal for the building loan fits into your planning, then simply send it back to the provider.
Apply for a building loan – the following criteria are important
- Realistically assess your financial resilience with a building loan. Careful planning and a detailed breakdown of income and expenses are the basis for determining how high the monthly rate may actually be. Don’t forget to take future costs into account. For your calculation, the classic annuity loan offers the advantage of the constant rate. Don’t forget the interim financing if you still have to stay in the old property while the new one is ready to move into. This means either further rent payments for the apartment that is still occupied or the old own property cannot be sold in time, then it is advisable to provide interim financing through a final loan, which is then repaid in full at a rate if the old property could be sold.In the case of a rented apartment,
- Equity, which is available to you, plays a major role in classic building loans. In general, the banks want a 20 percent share of the total loan amount. Equity not only reduces the total amount to be financed, it also significantly lowers the interest rate because the risk of the bank is significantly minimized. In general, the following applies: the more equity is available, the cheaper the building loan will be. In any case, it must be taken into account that at least part of the equity capital must be used for additional costs when purchasing real estate or building a new house. These are usually costs for notary, entry in the land register, broker commission, real estate transfer tax and court fees or expenses for expert opinions.
- Secure your construction loan through appropriate default swaps from which continue to pay the rate in the event of insolvency in order to avoid the loss of a home in the worst case. In the event of death or nursing care, this is covered by residual debt insurance or risk life insurance. The occupational disability insurance will step in again if the regular income of the main earner fails. Most of the time, banks offer such insurance with their loan offer anyway.
- Check the possibility of paying the construction loan with repayment repayments instead of the annuity loan. This could be life insurance or a building society contract, for example. The advantage is: Your repayment rate then builds up equity each month and at least with the home loan contract, you will receive good interest. This means that in addition to the necessary final repayment rate, additional equity capital can be built up for later purchases or requests. It also lowers the risk of interest rate changes in the home savings contract.The surely necessary follow-up financing can then be obtained not only at significantly more favorable terms, but also at an interest rate that is already known today (see information in the home loan and savings contract).