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Home finance through a home loan is the norm today. If you intend to buy a house or want to buy a new house, you will want to inform yourself in good time about the building finance and its conditions.
What does the property cost?
Building interest naturally plays an important role in home finance, but not the only one. The term of the house loan must be considered as well as a reasonable repayment plan.
But before you have to deal with the details of the house loan, you have to draw up a reasonable financial plan. Otherwise, you can quickly overdo yourself with home finance.
What own funds do I have and what about my monthly financial resilience?
Finally, it matters whether the real estate loan is used to finance the construction of a home or the purchase of a house.
Some financial service providers offer special loans for buying houses online, which to a certain extent are even available to borrowers with Credit Checker problems.
The cost of buying or building a house
These are the costs that are directly related to the property (purchase price, construction costs, ancillary construction costs, development, and interim financing costs).
In addition, there are the incidental purchase costs when buying a house or land purchase:
Brokerage fees between 3 and 6% plus VAT, fees for the notarization of the purchase contract as well as for the land registry office approx. 1.5% and real estate transfer tax of 3.5% on average, calculated from the purchase price.
The own resources
This includes equity as well as the monetary valuation of self-help.
Home savings contracts, employer loans or public funds are also considered. Existing plots of land that have already been financed naturally also belong to own funds.
The financial requirement is now the sum of the costs for buying or building a house, including ancillary costs less than the sum of own funds.
Personal financial resilience
This financial need must, therefore, be financed in the future.
An overview of the monthly financial resilience can be used to assess whether this is possible.
The first step is to determine the monthly income (net income without special benefits such as holiday and Christmas bonuses, child benefit and other regular income).
All payment obligations (e.g. other loans or maintenance), the costs for insurance, car / public transport, household items, food, clothing, personal care, telephone, future ancillary costs such as electricity, gas, and heating are to be deducted from this.
In addition, future maintenance costs must be included. For this purpose, a reserve of 0.50 dollars per square meter is usually calculated. The resulting final amount estimates the monthly resilience.
Maximum loan amount
With all these calculations in place, you can now calculate the amount of credit that the bank is likely to grant without much difficulty.
It can be estimated whether the expected home loan covers the financing needs.
The amount of financial resilience is multiplied by 12 and by 100 and divided by the sum of the interest rate + repayment rate.
The calculation is as follows: (resilience x 12 months x 100): (interest rate + repayment). A resilience of 600 dollars, interest rate 5%, repayment 1% results in a loan of 120,000 dollars.
According to the example above, this is the amount that the banks are very likely to provide for home financing and that the borrower can also handle it without risk.
Home purchase or home loan: the differences
Differences in the payment requirements are primarily relevant for borrowers.
Home purchase loan: Prerequisites for the payment of the net loan amount are the due date of the contractually agreed purchase price and the entry of the security (land charge) in the land register.
Both conditions must be documented. This is done by the notary’s notification of the purchase price and an extract from the land register.
The excerpt from the land register can initially be replaced by a confirmation of notary public if, as is so often the case, the entry of security in the land register is delayed.
Construction loan: The loan is either paid out after completion and acceptance or in installments in accordance with the construction progress.
Partial amounts are the rule. Which brokerage payments are due after which construction work can be found in the broker and property developer regulation.
The regulation applies if a property developer is the client’s contractual partner, but is often applied analogously in all other cases.
A distinction is made between 13 trades.
The first trade, for example, concerns the building site after the start of the earthworks, provided that the property is also sold. 30% of the total amount (20% for leasehold) is due for the completion of the first trade.
After completion of the shell construction including completion of the carpentry work, it is 40% of the remaining amount after deduction of the property costs.
The remaining 60% of the remaining amount will be divided among the other 10 trades.
For example, 10% is due after the windows have been completed and 12% are due after the cover is made. The final payment after completion is 5% of the remaining amount.