Trustworthiness plays a big role in a loan. And it’s not just your bank that needs to trust you. The trust is mutual. Make sure that the conditions of your bank with those from the advertising match in any case. If there are any discrepancies, you should address them immediately and possibly have them recorded in writing in your loan agreement.
Always read the fine print. Take your time to read the credit agreement, don’t let yourself be pressured. Do not sign the loan agreement between door and door. In the best case, you can take the loan agreement home with you and let the conditions run through your head. If something is not right for you, make a note of any questions and try to clarify them at another meeting. After all, a lot of money is at stake, and you shouldn’t sign a loan without asking.
Find out whether your loan will remain in one hand. There are credit companies that sell their customers’ loans to their creditors. This would be a losing deal for you. Why? As soon as other banking companies take over the loans, there can be horrendous reminder fees when payments are late. Immediate maturity of the loan is also not uncommon in such cases.
Data protection should also not fall under the table. Read through the terms and conditions and find out what will happen to your data. Often, low interest rates are associated with the fact that your data can be passed on. This may be a lucrative deal for the loan company, but not for you.
― T. Harv Eker
Your real estate project needs financing that you and your family can afford for years and decades. Including a two percent repayment per year, a loan of a quarter of a million euros at 3 percent per year accrues five percent of a quarter of a million euros. That’s 12,500 euros per year, over a thousand euros per month. Plus ancillary costs that you/they also have to pay as a real estate owner.
Then there is the difference between fixed-rate mortgages and those with variable interest rates. Agreeing on a high, fixed interest rate during a zero interest phase may seem absurd. On the other hand, variable interest rates are just that variable and subject to factors beyond your control.
The sooner a property is repaid, the better. For every year you/they use the loan, interest is due.
As a property owner, you generally pay less per month for a property of comparable quality than tenants. The money you/you pay the interest is still lost to you. It was not landed by a landlord, but by your bank. Which makes no difference to you on balance. Redemption you pay on the detour over the bank to yourselves. Thus: Repay quickly! The possibility of variable repayment should be provided for in your loan agreement.
Without equity, you will not get any financing. With too little equity, it will be too expensive for you. An equity ratio of 20% is a good guideline. Repay, don’t save!
The maxim “Repay quickly!” explains why savings contracts in combination with real estate financing are dubious. Banks work with the spread between the interest on loans granted and the interest on deposits. It would be uneconomical if they paid out higher interest on deposits than they earn on loans. If you save instead of repaying, in addition to the higher overall interest due to the longer repayment period, the bank earns an extra plus each month due to the spread between your savings interest and your loan interest.
