In this guide, we now turn our attention to a very interesting, but also complex topic. The comparison of the construction financing. Each bank has different conditions to offer for financing the property. But what is really decisive for the offer? Are it the interest of the providers? Are it duration and interest rate development? What do you have to consider for the offer of follow-up financing? In this guide, we want to give you expert and extensive advice, with the best information and tips.
Construction financing recommendations
Interhyp construction financing:
- 400 banks in comparison
- free construction advice
- multiple test winner
Commerzbank quote:
- Comparison of 250 banks
- Interest up to 40 years fixed
- Unscheduled repayments free of charge
What are important conditions and comparison criteria of construction financing?
Many customers are always stiffening in construction financing on the interest rates, which are presented in the advertising of the banks. But the interest rates of the bank are the decisive factor for financing a property? If you consider only the debit interest, this factor can be neglected for the construction financing rather. If you look at the effective annual interest rate, the comparison of the providers becomes much more interesting.
But why do you thus get a good overview? The effective annual interest rate includes the duration of the fixed interest rate, the amount of repayment, any discount, the timing of interest payments and repayments, as well as the fees for brokerage and processing. But now comes the big but. It does not include account maintenance fees, appraisal fees, partial disbursement surcharges, or commitment fees. What is the consequence? If you compare the current providers for financing a property, you must not only look at the annual percentage rate of charge.
Which factors are important for the credit or. to consider the construction financing with a bank? When buying real estate resp. of a construction financing, a so-called fixed interest rate is entered into. This means that you are secured certain interest rates over a certain period of time. Since we are currently in a low interest rate phase, this project is very lucrative. Hundreds of euros can be saved year after year. So if you want to buy a house, aim for a long fixed interest rate. And here we come to a crucial factor when comparing the various construction financing options offered by banks. How high is the residual debt after the expiry of the fixed interest rate? Why is this timing so important? Well, you can subsequently take out follow-up financing and again benefit from favorable loans, which we will briefly discuss later on.
However, it is much more important for the comparison of real estate financing that the information and details coincide. It hardly makes sense to compare two offers of a bank, if the term differs or also the loan amount. Therefore, it is important that the sum for the construction financing, the monthly installment or the initial repayment and the duration of the construction financing match, otherwise the comparison is distorted. Insurance can also be included in the offer. For example, insurance in the event of death or unemployment.
How to find a favorable construction financing?
If it were so simple to keep the overview regarding the offerers and offers with the Baufinanzierung, the banks would not make good business over years. The bank benefits from the fact that the consumer is too little concerned with the financing of real estate and the associated conditions. Now we have given you an insight into how you can find the criteria of a loan for financing. Because what is the use of calculating in a repayment calculator, if you do not know how you can get favorable loans and save costs?
The first port of call for most consumers is their local bank. There is nothing objectionable about this either. You get a quote, get personalized advice on the spot with lots of tips, and may be able to take advantage of a good interest rate trend. But much more important is what happens afterwards. The monthly rate may sound appealing, but what does the competition have to offer when it comes to construction financing?? How do the interest rates look? Costs can be incurred over months and years. Recently, the Stiftung Warentest found out that for a term of more than 20 years differences of 40.000 euros can arise. At the latest now you should be aware that you can save by comparing the real estate financing.
Thereby the procedure is relatively simple in the today's time. Large and reputable financial magazines offer simple repayment calculators, calculators for construction financing or calculators for follow-up financing. The best offers can be calculated thus. Then it's your turn. The calculated conditions must be put into practice. You now know how high the loan amount should be, what the term is and what duration of the fixed interest rate comes into question. Already these few conditions are sufficient to make a comparison of the offers with regard to the financing of a real estate.
Which is the best construction financing on the market?
Consumers would have liked to answer this question. However, it would entail a very long answer. In the final analysis, no general statement can be made, which is also due to the equity capital, among other things. If you are interested in a construction financing, you can use as a guide the study of Finanztest. Financing that has a Riester subsidy is recommended, for example. If you want to build savings, Stiftung Warentest recommends Schwabisch Hall, BHW or Wustenrot.
If you want to find out about current interest rates of a bank quickly and clearly, we recommend the platform FMH. These are independent financial advisors who compile current conditions for the consumer. The current leaders are dr. Klein, DTW and Interhyp. It refers to a loan amount in excess of 100.000 euros, with a fixed interest rate of 10 years, an initial repayment of two percent and 20 percent equity. Your fixed interest rate expires soon and you are interested in a forward loan? Santander Bank, hypotheker and ACCEDO are the leaders in forward loans. Here we also go from 100.000 euros from, a lead time of 12 months and a commitment of 10 years.
Here's what our construction financing guide says:
- Do not pay attention only to the debit interest rate and APR.
- Duration and number of years are important.
- Compare as much as possible.
- Regularly visit relevant portals.