Home finance: Plan smart and solid

Home finance must be well calculated. It is therefore important to clarify in advance how much equity you can use, which additional costs are incurred and how high your monthly burden may be. With reliable rates and low interest rates, the building society savings contract becomes a cornerstone of your real estate financing.

Table of Contents Table of Contents Home Finance: Plan Smartly and Solidly

• How much can my house cost?
• Determine equity
• LBS mortgage lending options
• Advantages of the LBS home loan
• Mortgage loan
• Own contribution in building a house
• What grants can I get?
• Important terms for financing

Table of Contents Table of Contents Home Finance: Plan Smartly and Solidly

• How much can my house cost?
• Determine equity
• LBS mortgage lending options
• Advantages of the LBS home loan
• Mortgage loan
• Own contribution in building a house
• What grants can I get?
• Important terms for financing

The house financing must be planned carefully so that there are no money problems later. Your home loan savings contract plays a crucial role in this: You enjoy interest rate security over the entire credit period and can calculate with fixed rates, and the favorable interest rates also make your investment easier. In addition to the home loan savings contract, which usually covers 20 to 30 percent of the costs, about 20 to 30 percent equity is usually required. The remaining 50 to 60 percent can be paid through a mortgage loan.

How much can my house cost?

At the beginning of the house financing, your financial scope must be calculated. Use your income to determine how many euros you can spend monthly on the loan installment of the financing. So write down regular income payments and then calculate monthly expenses such as living expenses, housing costs, insurance, radio and television and much more. The comparison of the amounts should result in a freely disposable income from which the monthly charge is calculated. The amount of the monthly rent at this point can serve as a guide.

Tip: The amount of the mortgage lending rate should not exceed 40 percent of the available net income. In addition, you should not forget to include the incidental purchase costs for the house purchase in the cost planning.

The following table gives a rough overview of how high the monthly charge is - depending on the total costs of a property purchase and the existing equity. Important: In individual cases, an individual calculation of the real estate financing is always necessary.

This is how it works with financing
Object price (including additional costs for brokers, notaries and real estate transfer tax)	200, 000 euros	300, 000 euros	400, 000 euros
financing
30% equity	60, 000 euros	90, 000 euros	120, 000 euros
including Bauspar credit from	40, 000 euros	60, 000 euros	80, 000 euros
30% home loan	60, 000 euros	90, 000 euros	120, 000 euros
40% annuity loan	80, 000 euros	120, 000 euros	160, 000 euros
Interest and repayments per month
Building society loan (monthly return payment rate 4 ‰ of the home savings sum)	400 euros	600 euros	800 euros
Annuity loan (repayment 4% per year, borrowing rate 2% fixed for 10 years)	400 euros	600 euros	800 euros
total monthly charge	800 euros	1200 euros	1600 euros

Determine equity

The amount of equity also determines how much the property can cost. 30 percent own funds are a good basis for financing. “But it can also be done with less effort,” admits Gerhard Zieris, financing expert at LBS. If you want to build or buy in sought-after regions such as Munich or Hamburg, you can often hardly raise 30 percent equity. "In individual cases, 75 or 80 percent of a property can be financed externally, " says Zieris. This of course presupposes that the borrower can pay the monthly installments in the long term.

In order to be able to estimate how much money is regularly available for a loan, it is helpful to keep a budget book for a few months. “However, use as much equity as possible. Your home savings credit is definitely one of them. You should not touch your life insurance. If you have calculated the total purchase or construction costs including ancillary costs, two to three net salaries are usually sufficient as a reserve.”Shares and securities can also count as equity. As soon as the purchase becomes concrete, you sell these items and invest the money securely.

Basically you should save about 30 percent equity.

Photo: MEV publishers

LBS mortgage lending options

No building society contract yet

If you suddenly find your dream property, but have not yet reached the minimum saving period of your building society contract or only want to conclude a building society contract in the future, then LBS pre-financing can be the solution. You will receive an LBS pre-financing loan in the amount of your home savings. While you continue to save on your home loan savings contract, you only pay the interest on your pre-financing loan. When your home loan contract is allocated, you use it to redeem the loan.

Savings contract already saved

Have you already reached the savings target and the minimum time, but have not yet been allocated a home savings contract because the valuation number has not yet been reached? Then the interim financing can help you. While the interim financing is running, you only pay the interest on the loan. Only when your home savings contract has been allocated, do you replace it with your home savings sum.

Advantages of the LBS home loan

By saving your home savings contract, you can acquire the right to a cheap home loan. The following benefits result from the LBS loan.

• Low loan interest rates over the entire term: Even in a low interest phase, the loan interest rate of the building society regularly undercuts the mortgage conditions.
• Fixed interest rates: A fixed monthly interest and repayment rate is agreed upon when the LBS building society contract is concluded.
• Rapid repayment: The loan is usually paid off after around ten years. If you want to be debt-free faster, you can make special repayments at any time.
• Monthly constant rates (no fixed interest rate)
• No interest surcharge (usual with a second mortgage or with smaller loans)
• The security in the land register is subordinate

Mortgage loan

The remaining costs of your construction or purchase project can be financed by the Sparkasse through a mortgage loan. Here you should make the choice of the fixed interest period - usually five, ten or 15 years - dependent on the level of the current interest rate.

What is a mortgage?

Like a mortgage, a mortgage is one of the mortgages. The bank thereby secures rights to a property and the borrower receives a loan in return. If the borrower is unable to pay, the bank can auction the property and thereby settle your claims. The amount of a mortgage depends primarily on the value of the property. After careful examination of the land register extracts, plans and purchase contracts, the mortgage lending value of the property is calculated.

Get advice from an expert. There are many ways to finance a house.

/ Minerva Studio

Annuity loan

Since the mortgage loan is usually a very large sum, the annuity loan procedure was invented: the debtor pays a fixed amount each month - the annuity rate, which not only pays the interest, but also repays part of the loan. In the following installment, the interest only relates to the remaining debt, with the pleasing effect that the repayment portion of the specified amount increases. Your burdens remain the same, the interest-repayment ratio shifts in your favor.

And year after year - as long as you have fixed the interest. With one percent repayment, it takes a good 35 years to repay the loan - no problem for a 30-year-old. If you want to get rid of the debt faster, agree on higher repayments, for example three percent. Then the loan is paid off after almost 20 years. In times of low interest rates you should fix the interest rate as long as possible, in periods of high interest rates rather short. Usually you choose five or ten years. Anyone who fixes the interest to 15 years (or even 20 or 30) can still switch to more favorable conditions after ten years, provided they announce it six months in advance.

Risk life insurance

In order to secure the mortgage loan, it is advisable to take out life insurance. In contrast to capital life insurance, it only exists to cover death. In the event of death, the agreed sum insured is paid out. At best, the loan amount can be completely paid off and the surviving dependents are free of debt. The premiums for life insurance are relatively low, but depend on age. For the purpose of building finance protection, a life insurance with a falling insurance sum that covers the outstanding amount is sufficient. The premiums should be compared on the basis of the present values ​​of all contributions, low initial contributions can be misleading.

Own contribution in building a house

Saving through personal contribution: If you can do a lot yourself, the construction budget is reduced by five to 15 percent. There is, for example, the so-called muscle mortgage, in which banks recognize the contribution they make when building a house as part of equity and thus offer better credit terms. As a rule, banks recognize between ten and 15 percent of the total construction sum as their own contribution.

But don't overestimate yourself if you want to build your own house. Because not all handicrafts are suitable for hobbyists. Painting and wallpapering work, as well as laying tiles, should also be possible for inexperienced builders. Experienced craftsmen with a lot of time may also take part in the structural work or plastering. However, what you should definitely leave to specialists is the electrical and sanitary installation.

If you can do some of the work yourself, you have the option of relieving the construction budget by up to 15 percent.

Photo: grafikplusfoto / Fotolia

What grants can I get?

From the state side - but also from other institutions - there are various funding options for building or buying your own home.

Residential Riester

In the case of a residential Riester contract, part of the income is paid into the contract. The state pays grants. In addition, the deposited money can be deducted from tax as a special expense. The paid-in money must be used for a property in any case, for example by paying it into a home loan contract.

Promotion of housing

With the Housing Promotion Act, certain federal states help low-income families to fulfill their dream of owning a home. But here, too, equity capital of around 15 to 25 percent has to be generated. Occasionally, benefits in kind, such as self-brought in building materials, are also accepted.

KfW loan

KfW-Bank provides low-interest loans for building or buying a house, provided that it is your own home. However, funding can also be included in the case of a renovation or renovation.

Promotion of home ownership by the states and municipalities

There are also cheap loans and grants for building or buying a home at the state level. Find out from your respective Landesbank. The application for funding is usually submitted to the district office or to urban districts.

church

The church occasionally awards land with leasehold rights. So a family can build on the property without having to buy it.

Employer loan

In some companies it is possible to get an employer loan. These are cheaper than a normal real estate loan from the bank.

Important terms for financing

You will often encounter the following terms when it comes to home finance. Before you are faced with signing loan contracts, you should know what they mean.

• Annuity Loans: Most mortgage loans today are annuity loans. That means: the rate remains the same until the end of the fixed interest period; the interest component continues to decrease over time because the debt is reduced by the repayments. In return, the repayment portion increases. Your consultant will give you a repayment plan with the contract documents - for a better overview.
• Follow-up financing: After the end of the fixed interest period, you provide a low-interest successor loan. For follow-up financing, it can be worthwhile to conclude an LBS building society savings contract. If it is ready for allocation at the end of the fixed interest period, it replaces the building loan - you benefit from favorable loan rates.
• Lending: The lending value indicates the amount up to which the credit institution is willing to recognize the property as the equivalent of the loan. The loan-to-value ratio informs up to what percentage the property is financed with outside capital in relation to the market value. Additional purchase costs such as real estate transfer tax, notary fees and land registry fees are included in the invoice.
• Effective & nominal interest: The effective interest also indicates other credit costs, for example processing fees or commissions, and helps you to compare interest from different providers. The nominal interest rate is decisive for the calculation of the monthly rate.
• Non-acceptance compensation: The following applies to builders: If they do not use the contractually agreed loan, banks are entitled to demand non-acceptance compensation. Some credit institutions release their customers if they forego only five to ten percent of the loan amount.
• Riester funding: Builders and buyers use the Riester funding if they have acquired their house after January 1st, 2008 (the key date is completion or transfer of ownership) - regardless of whether you use it for savings or repayment.
• Special repayment: Good if you use the bonus payment from the boss or an inheritance for debt relief - and save interest. You can pay off your home loan at any time. Many savings banks allow you to repay three to five percent of the loan amount per year without prepayment penalty.

• Amount of repayment: You agree the amount of repayment for your mortgage loan according to your financial possibilities. The higher the repayment, the faster you are debt free. Let your savings bank or LBS consultant work out which repayment amount is the cheapest for you.

  Prepayment penalty: If you repay a loan with a fixed interest rate early, credit institutions apply compensation for the loss of interest. In the case of fixed interest periods over ten years, you can terminate the loan within a six-month period after ten years.

• Fixed interest period: By agreeing on a fixed interest rate for your mortgage loan, you hedge against unfavorable interest rate developments on the capital market. If you only agree on a short-term fixed interest rate, you currently save 0.1 to 0.2 percentage points of interest - but risk that the interest level will be higher after the expiry. You are currently agreeing on the longest possible fixed interest periods.
• Allocation: You can allocate your home savings contract by saving 40 to 50 percent of the home savings in regular small installments - also with the help of state subsidies such as housing subsidies, employee savings allowances and residential Riester allowances.