Mortgage lending comparison
What should be considered in the construction financing? How do creditworthiness, interest and principal affect the amount? Inform yourself with our guide on mortgage lending and real estate purchase.
In short: The most important thing about the construction financing comparison
- In our construction financing comparison you will find the cheapest mortgage interest rates on the market. Find the ideal financing for your dream property.
The level of the interest rate and the repayment rate on your mortgage lending can have a significant impact.
Mortgage lending: Comparison is worthwhile
When it comes to mortgage lending, you should definitely not rely on just one offer. It is important to compare, compare and compare again. Because only minimal differences in the bound debit rate and the effective interest rate, the repayment installment or the duration make a big difference to the total costs. The most important factor in financing is the effective interest rate. The lower it is, the more money you can save. You can see that in the following example.
It will require a loan of € 200,000. The term is 20 years. The repayment is at the recommended by us at least 2.5 percent.
- This calculation shows that only a small difference in the interest rate has a big impact on the total cost of your mortgage. The financing costs 12,000 euros more in the second example. This makes it clear that it is worth comparing to get the best conditions.
Mortgage lending comparison: what should be considered?
The real estate loan
You as a person
What are the effective interest rates? How long is the interest rate commitment? How much equity do you bring with you? How high is the mortgage lending value? What is the loan? How long is the construction loan? Are special repayments possible? Are additional costs co-financed? All these points have an impact on the cost of financing. These points should be included when comparing offers.
Relationship between interest rate and equity
Although equity is not a requirement for real estate financing, it does bring financial benefits. The rule of thumb is that the higher the equity interest in mortgage lending, the lower the financial need and the more favorable the interest costs. Because with high equity, the risk for the bank decreases, this is rewarded with favorable interest rates. Banks are reluctant to see financing with little or no capital, as they are risky and there is a risk of over-indebtedness of the borrower. In this case, interest surcharges threaten, with insufficient credit rating, the bank rejects the lending.
40 percent rule: The risk premiums are staggered according to the level of financing requirements: You get the best interest rate if you can pay at least 40 percent of the acquisition costs out of pocket and need a maximum of 60 percent credit for mortgage lending. If you need a higher loan share, interest rates rise quickly. Banks pay 0.1 to 0.3 percent interest on every ten percent higher loan component. Disadvantage: The loan costs are increasing rapidly.
Special repayment: The sooner the better
In addition to the monthly repayment, you can make an extra payment on your loan account once a year. The special payment must be announced in advance in writing. You kill two birds with one stone: The extra payment shortens the repayment term and additionally saves a lot of interest. For example, if you repay $ 10,000 at five percent lending rates after ten years of ten-year mortgage lending, you will reduce the interest payments due by $ 2,800. The total term of the construction loan decreases by 3.5 years. If the special repayment flows sooner, you can save even more: Transfer the special repayment after only two years instead of five years, reduce the interest payments even by 4,800 euros and the mortgage lending for more than four years.
Tip: Make sure the bank does not ask for an interest premium on the special repayment option.
You should choose the interest rate commitment as long as possible against the backdrop of the currently low mortgage interest rates. So at least ten, 15 or 20 years. All conditions can be found in our mortgage lending comparison.
For the term: The faster a loan amount can be repaid, the cheaper the terms. Special repayments should be granted in any case. Do not choose financing where this is not possible. And as an amortization rate, we currently recommend at least 2.5 percent per year.
Is the annual percentage rate of the two banks the same? What about the deployment interest? Anyone who takes the loan or parts of it later than agreed, pays this extra charge. Most are per "late month" 0.25 percent. Some banks charge this premium after six months. For others, it is due only after twelve months or even later.
It is also important who needs the funding. Various factors play a role here. Your job, job security, your age, the amount of your income and equity.
What is your budget surplus? What is your Schufa score? Based on these data, the bank can estimate its own risk associated with lending. After that, the conditions are determined. But you yourself must also clarify a few questions. Renting or buying is the better option for you?
The more collateral you bring, the cheaper the conditions. A crisis-proof job, preferably as a state official, is welcome. And the higher the equity, the better.
Which groups of people get a real estate loan?
Quite simply, anyone who can afford the loan. But not only. Before banks give out a loan, they not only check the current creditworthiness. They want to know especially with the long-term loans: the person can repay the money still in ten or 15 years?
Potential borrowers who are employed by solvent large enterprises or in the civil service have advantages. It is more difficult for the professional groups that are threatened by redundancies, such as waiters or construction workers. Or who are only in the job shortly. Or change job every two years.
Banks are also eyeing the mortgage lending of self-employed people critically. Because their income varies from month to month, depending on the order situation. Only if they are successful for many years, the credit flows. Exceptions are good-earning doctors, lawyers, tax consultants.
Senior citizens also have a harder time with mortgage lending. Often they are not told why they are rejected, because then there is a threat of discrimination. But if there is enough collateral, such as a paid-for property, then nothing stands in the way of a new loan such as a modernization loan.
You are a single parent and want to buy a property? It’s not as easy as if you were a couple, but it’s possible. In our guide "Mortgage lending for single parents" we show you how.
More and more people in Germany are choosing to live together without a marriage certificate. Does it go to the "nesting", unmarried couples need to pay attention to all sorts of things. What happens in case of premature separation? Or if the partner dies prematurely? In our guide to the topic "Partnership contract: How unmarried people should settle the house purchase", learn everything worth knowing. So it works without a marriage certificate with the residential property.
Many young families want to be in their own four walls as soon as possible. But in the first place they need one thing – money. This means exploring one’s own financial possibilities and, in addition, making use of attractive state funding options. In our guide to the topic "Construction financing for families" Learn what young Eigenheimer should look for.
Civil servants are a special group of employees and this can have a positive impact on lending. Due to the nature of their employment relationship and their secure income, they receive particularly good conditions for mortgage lending from the banks. More in our guide "Mortgage lending for civil servants".
Last but not least, when it comes to mortgage lending, it also depends on which purchase is pending. A house or condominium? The location of the property is enormously important. Is it a new building or a carefully renovated old building? Are leasehold rights or is the property encumbered??
- Of course, all donors prefer good locations and properties that are in sound condition to your purchase. If this is not the case with you, for example because you want to make renovations yourself, you should show this.
In order to provide you with even better support in mortgage lending, we have set up guidebooks for the largest German cities, in which we shed light on the real estate market for buyers and tenants and give tips on financing:
You want another city here? Then simply write us an e-mail. We are looking forward to it.
You will receive construction money from various providers: local regional banks and savings banks, direct banks such as ING-Diba, building societies, insurance companies and special credit intermediaries. Their conditions can be found in our mortgage lending comparison. When you buy a property for the first time, personal advice – by phone, video chat or in the store – is required. By our comparison you come to a favorable mortgage and the best offer.
As a borrower, please also make sure that the bank or savings bank offers you KfW loans and that these can be integrated into the overall financing package. If so, you not only pay the monthly installment to the bank, but also to KfW.
But not only KfW, but also all federal states offer their own home purchase and construction subsidies.
If you have at least two offers, you can use our offer comparison. Here you enter the bound debit interest, the duration of the construction loan and the repayment rate. Finally, you will receive a calculation, which offer is cheaper.
Baufinanzierungsvergleich: The best deals
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comparison "banks and insurance companies": Loan amount 300,000 euros, term 10 years, initial repayment 3.5 percent, loan 60 percent. As of: 11th November 2019.
Note: Some providers are not linked because they currently do not want to acquire any customers through our comparison. How we finance ourselves, we have in the section "about us" transparently disclosed.
Mortgage lending: comparison of different loan types
In mortgage lending, borrowers have the choice between different forms of construction loan, which could be more or less suitable for you depending on your needs and your personal situation. Here are the different loan types in the overview:
For whom it is suitable
The classic annuity loan is paid at a fixed monthly rate. This always remains the same and consists of an interest and redemption portion. At the beginning, the interest rate is higher. But it decreases over time. Month after month, part of the debt is paid off. To the same extent, the repaid debt increases month by month. Usual are terms of five, ten, 15, 20 or 25 years.
For private buyers of self-used real estate.
Building savings consists of a savings and a loan phase. When signing the contract, you agree on the credit and the future loan interest. The home savings loan requires a certain planning. If you are renting and want to buy property in a few years, a contract can be worthwhile. Beneficial may be possible government subsidies and arbitrarily high deposit rates that you can determine yourself. It is also up to you, when and in which form you take the loan from the Bauspar contract.
For younger people who do not yet know if they want to buy a property later, but still want to secure the favorable interest rates. The loan can later also be used for the modernization of a rented apartment.
Mortgage lending with flexible repayment
Pay attention to costs: Some credit institutions calculate additional interest rates on the current interest conditions for the possibility of amortization. However, some providers waive this premium. Frequently, two or three redemption changes remain free of interest during the fixed interest period.
For young couples who are planning to start a new career in the near future and who would like to correct the repayment rate downwards accordingly.
But also for borrowers who want to maintain the flexibility during the repayment period, as they later expect a larger sum of money – for example from an inheritance.
Fixed rate loans
In contrast to the normal construction loan, the fixed-rate loan is not repaid on an ongoing basis, but only pays interest. The loan debt remains the same until the end of the term. Instead of repaying, the money flows continuously into a replacement product, such as a capital-forming life insurance, fixed income securities, funds or a building society savings contract. With the accumulated money you settle the loan debt in the end. This form of loan is particularly suitable if the property is not used for own purposes and bought as an investment. In contrast to the repayment, landlords can claim the construction interest tax-reducing. And with a positive performance of the reserves can even end up a surplus of property.
Real estate buyers who want to optimally exploit the tax advantage of a property as an investment.
Loans with variable interest
This is a loan with variable conditions, ie without fixed rate fixation. As a rule, these loans have a very short fixed-interest period: instead of several years, interest rates are only set for three to six months. The conditions are constantly adapted to the current market conditions. As a borrower, you have the option of repaying the loan at any time without incurring a prepayment penalty. The variable loan is not suitable for traditional mortgage lending, but rather for consumers with very good credit ratings or for borrowers who expect special income in the foreseeable future. Here a personal consultation is particularly recommended. Loans with variable interest rates are particularly advantageous when interest rates are falling.
For consumers who only need temporary credit. The new property is bought, the old one is not sold yet. Also for borrowers who in the short to long term a high cash receipt such. expect an inheritance, this form of financing is suitable.
If you can handle a large repayment monthly, you should look at a Volltilger loan. With this construction loan, you will pay off the entire loan amount within the specified term and fixed interest rate. But that is only possible if you have an above-average and secure income. Rapid repayment and high monthly burdens are the hallmarks of a Volltilgerdarlehen. The advantage for you: Volltilgerdarlehen usually offer slightly better conditions than traditional real estate loans.
High earners, who shoulder a high monthly burden and have a very good credit rating.
A real loan is a loan secured by mortgages, such as mortgage, mortgage or security deposit. The peculiarity of this loan is that the mortgage lending limit may only amount to 60 percent of the mortgage lending value of a property.
Consumers who own a burden-free property and want to finance a second one. Seniors who are planning a renovation for their paid property.
If the property is already getting old, a modernization loan can be worthwhile. The loan is earmarked. In other words, borrowers may only use the money for the purpose specified in the loan agreement. In addition, a modernization loan will only be given to property owners. Depending on the size of the loan, consumers must show an appropriate equity ratio.
Consumers who want to remodel a property or renovate it energetically.
Installment Repayment loans
In the repayment loan, the borrower undertakes to repay a certain loan amount plus interest over the term. The special feature: The financial burden decreases every year. Although the repayment performance remains constant over the entire term of the loan, the interest burden decreases with each repayment installment, as it is always calculated on the basis of the residual debt. As a result, the payable installment will be lower from month to month, fundamentally different from other forms of financing, such as the classic annuity loan.
Older borrowers who want to repay faster until retirement.
The Kreditanstalt für Wiederaufbau (KfW) offers a broad range of low-interest, low-interest construction loans in order to build or modernize environmentally friendly. Thanks to this so-called KfW subsidy, you can significantly lower your monthly rate. The state-owned KfW-Bank only grants construction loans for residential purposes to private individuals.
Buyers of self-used real estate, who want to build environmentally friendly and energy-efficient with favorable conditions.
If the fixed interest on the original construction loan ends, follow-up financing follows. If this deadline does not end in twelve or more months, a forward loan could be considered for you. For a small premium you can secure a favorable interest rate of today for the credit of tomorrow.
Buyers of self-used real estate, who want to build environmentally friendly and energy-efficient with favorable conditions.
A follow-up financing is required if the existing mortgage lending is insufficient to cover all construction costs. Since the workload for the bank is large, the interest rates are usually higher than with a traditional home loan. In addition to sound financial planning and the necessary equity, builders should choose a so-called reserve option in the first loan.
Builders who are facing unforeseen costs that were neither foreseeable nor calculable in building a house.
This is how our comparison works
We have pre-set a loan amount of 200,000 euros, which you can change at any time. You need to know: Loans well below € 100,000 are more expensive or are not offered by most financial institutions. The processing cost of a mortgage lending is much greater than the installment loan. And with a loan of less than 100,000 lending to the credit institutions is no longer worthwhile.
Due to the low interest rate environment, we recommend a repayment term of at least 15 years. Of course, you can also secure the low interest rates for ten, twenty or twenty-five years. With longer maturities, you do not take any risk if interest rates rise as soon as your interest rate lockout expires. At a glance, you always see the monthly installment, which consists of the interest and redemption portions.
As an additional help, we have set up a mortgage lending test. In this we evaluate the provider and his product. There are a maximum of 5.0 stars to achieve. The main criterion of the valuation is of course the interest rate. You can see the test seal and the rating in our comparison. If you want to know more about the product, just click on the word “Product details”. There you will learn, among other things:
For which interest rates the specified interest applies.
What maturities the bank offers.
These advantages are offered by our mortgage lending comparison
If you want to buy a property, you should first consult your house bank, as this knows your financial circumstances best. It can quickly tell you how much credit you can borrow.
In our construction financing comparison you can find the interest rates of more than 120 providers. However, you can not see all providers at a glance, as the majority of providers in our comparison are regional banks and savings banks. To see the best construction rates in your area, simply enter your zip code in the appropriate field. We also make sure that the conditions are always up to date.
These are the construction financing providers:
- Supraregional banks
- Regional banks and savings banks
- building societies
- loan brokers.
You will find the cheap offers from all over Germany with the test winners from our comparison. Depending on how high your loan should be, how long you want to pay it off and how much equity you bring.
Only the effective interest counts
If you compare the offers of various banks and savings banks, only the so-called effective interest rate is meaningful. The debit interest only takes into account the interest rate to be paid. The crux: One or the other bank calculates partly not inconsiderable ancillary costs, such as costs for valuation reports, commitment rates or partial payment surcharges.
These cost factors are allocated to the agreed fixed interest period in the calculation of the effective interest rate and calculated accordingly. So that you can see at a glance which specific interest costs you are facing, we always show the annual effective interest rate in our comparison.
How interest and repayment amount affect the term
How long borrowers need to repay the entire loan depends on the repayment installment and interest rates. As a general rule, consumers should have paid off the property when they retire, since their retirement is usually much lower and the loan can therefore only be serviced with difficulty. As illustrated by the example calculation below, consumers should also pay attention to a sufficient repayment amount in addition to interest rates.
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