Real estate loan despite credit bureau? You can find out what options there are and how you can finance your property in our guide
Real estate loan – your way to a new home despite credit bureau
Most people in Germany dream of a condominium or a home.
Your own property offers the greatest possible freedom of design and lets you shape your home completely according to your individual ideas. Buying a condominium or a home, however, is in most cases associated with high costs.
Only very few people can afford their own property without financing. However, if funding is required, some important points should be noted. In particular, it has been shown in recent years that the application for a real estate loan via the Internet brings with it some clear advantages – this applies above all to a real estate loan with a negative credit bureau.
1 What advantages does the online application for the real estate loan bring?
A real estate loan can be applied for both in person at the bank and over the Internet.
Many people still go to their house bank and find out only about their conditions for a real estate loan. However, as this is usually a very high loan amount, even the smallest differences in terms can lead to significantly lower costs. For this reason, it is always important to compare the offers of several banks.
Our credit experts help you to choose the right financing, through individual and personal advice, a real estate loan is also possible with credit bureau entries
When applying for a real estate loan on the Internet, all important facts about a loan offer can be clearly collected and compared with other offers. With just a few clicks, it is possible to find the best deal without visiting each bank in person. In this way, the necessary information for a comprehensive comparison can be collected much faster.
Simply apply for a real estate loan online
In addition, our online offer offers you much more comfort than a normal application for your loan. For the application you do not have to take a long way to the bank, but can simply put this out of your living room.
Here you make yourself comfortable on your sofa and our credit experts check the conditions of several banks for you. After you have decided on our offer, you can apply for it within a short time. In this way, you not only save an enormous amount of time when applying, but you do not even have to leave your home.
As a rule, banks and credit institutions also offer significantly better conditions for an online loan. This is because on the one hand, you can find a cheap and easier offer on the one hand when looking for a real estate loan over the Internet, and on the other you do not have to have any ties to the bank.
The own house bank usually assumes that one would prefer to take up a loan with this bank due to the existing contact to the own customer advisor. Therefore, an offer is sought, which is comparable to that of the competition.
Due to the lack of personal contact with the customer advisor, the offer in an online application, however, is usually aimed at convincing in an objective comparison with the competition.
The online application for the real estate loan not only saves you a great deal of time and stress, but also allows you significantly better conditions. In this way you save a lot of money when applying for your real estate loan despite credit bureau.
2 How much real estate credit can I afford despite credit bureau?
One of the most important questions people who are interested in a real estate loan depend on the optimal amount of the loan.
For this purpose, it must be determined what costs the maximum purchase of the property may cause. In this calculation, you should consider both that the purchase of a property saves you the payment of the monthly rental costs, and that not only the direct costs of the property are relevant for the total cost.
Determination of monthly installments
The first step is to determine which monthly installments you can pay the maximum. As a rule, most of the installment payments are financed by the avoided rental costs. For this reason, the currently paid rent is the basis for the possible installment payments.
In addition, you also add to this amount the portion of your monthly savings that you could forego while financing your home. Assuming now a rent of 800 usd and a monthly surplus of 400 usd, this results in an available amount of 1,200 usd. From this, however, the expected management costs must be deducted.
These are used for minor repairs and maintenance. In general, this can be assumed to be $ 3.50 per square meter of living space. With a living space of 100 square meters, this results in calculable costs of 350 usd and an amount of maximum 1,050 usd per month available for payment of the installments. Only in the second step, you can calculate which loan amount you can finance with the calculated monthly installments.
The amount of the loan
This is particularly important until when your mortgage loan should be paid off at the latest. The longer the term of your loan, the lower the monthly contributions for the repayment of the loan amount. A long term of the loan therefore allows you to finance a significantly higher loan amount.
As a rule, however, it is recommended that you have paid off your mortgage loan at the latest on retirement. Therefore, if you apply for a real estate loan at the age of 35 and plan to retire at the age of 65, you should expect a maximum term of 30 years.
With a maximum monthly installment of $ 1,050, a term of 30 years and an effective annual interest rate of 2.5 percent, the maximum loan amount is over $ 350,000. However, this is not the amount your property may cost.
How much may my property cost?
The calculated amount must be paid for all costs directly related to the purchase of the property. Therefore, if you deduct from this amount the anticipated additional costs of purchasing a real estate, you will receive the amount which your property may not exceed.
Since a purchase of real estate requires ancillary costs of between five and 15% of the purchase price, the above-mentioned example financing is suitable for the acquisition of a property worth around $ 300,000.
3 Is equity required to apply for the loan?
No capital is required to apply for a real estate loan, Nevertheless, it is always advisable to have as much equity as possible when applying for the real estate loan, despite credit bureau. Equity has a major impact on the maximum amount of the purchase price of the property as well as on the costs of real estate financing.
The purchase price of the property as well as the additional costs of purchasing the property are paid by the equity and the loan amount. The higher the equity, the more expensive the property can be with a constant loan amount. In addition, you can of course also reduce the required loan amount through your equity.
Reduce borrowing costs with equity
The contribution of equity into a real estate purchase lowers the required loan amount and thus also the resulting interest burden. A falling loan amount will result in many different benefits for you as a borrower.
A lower loan volume significantly reduces the default risk for the bank. In this way, the chances of getting the real estate financing approved by the bank increase enormously.
In addition, you benefit from significantly better conditions if you bring the highest possible equity into real estate financing. The more equity you use for your real estate financing, the lower the interest rate will be.
For this reason, it is often recommended to finance part of the purchase price with equity capital.
What should the equity ratio be?
You can secure the best conditions if you aim for an equity ratio of 20 to 30% of the purchase price.
Nevertheless, it is advisable not to use up all the savings for the real estate loan.
By withholding equity, you benefit from a particularly high level of security and can react to unforeseen costs without any problems. It is often recommended to hedge between two and three months’ salary. If you do not get an equity ratio of 20 to 30%, you can also secure a liquidity reserve with the help of a framework loan.
In this way you pay the higher interest rates only in the time in which you need the additional loan. Immediately after repaying this loan, you benefit from particularly low interest rates on your real estate financing.
4 What additional costs should be considered in the real estate loan?
The real estate loan should not only provide sufficient capital to acquire the property, but also cover the additional costs incurred. These are not counted directly to the cost of the property, but are still directly related to the purchase of real estate.
Real estate transfer tax:
One of the most important additional costs is the real estate transfer tax. This tax must be paid by all people who acquire land or a share of land. The amount of the tax is determined individually by the municipalities and the Länder, and is therefore sometimes very different.
The basis for the calculation of the real estate transfer tax is the purchase price of the property. The tax rate varies between 3.5 and 6.5%. When purchasing a property worth $ 100,000, some $ 6,500 real estate transfer tax will be due in some states.
After the land transfer tax, the notary fees should also be considered. The purchase of a property in Germany is only valid if it is notarised by a notary. As a rule, 1.5% of the purchase price of the property is notable for notarial certification of the purchase contract. In addition, a land register entry must also be made. This will also be arranged by the notary and will incur costs of 1.5% of the purchase price.
Other additional costs
In addition to these two costs, which are incurred with each property purchase, may also incur some additional costs. If a real estate agent is commissioned to purchase the property, brokerage fees will apply. These are usually individually negotiable with the real estate agent.
However, these are usually between five and eight percent of the purchase price of the property. Furthermore, occasional modernization costs may be incurred if a property is acquired, which is already empty for several years.
Finally, the costs for the move and the new furnishings of the purchased property must also be included. Depending on the type and complexity of the furnishings and the move, this will cost an average of between 2,000 and 10,000 usd.
5 Which insurance can be taken out with a real estate loan?
Together with a real estate financing, some useful insurance can be completed.
Basically, these insurances offer both you and your bank increased security and can thereby help you at a much lower interest rate. The two most important insurance companies here are life insurance and residual debt insurance,
In addition, however, other useful insurance can also be completed individually.
These insurances give you the following benefits:
Advantages of residual debt insurance:
A residual debt insurance makes sense in any case. This useful insurance protects you and your survivors in the event of unemployment, sickness or death. For this reason, this insurance is often referred to as credit life insurance. In this way, you can protect yourself from jeopardizing your loan agreement in times of unemployment.
Benefits of life insurance:
A life insurance can be used as an amortization module in real estate financing. However, you must calculate in advance exactly whether the conclusion of a life insurance for this purpose really worthwhile. This is always the case if, after deduction of all costs, the life insurance promises you a return that is higher than the interest costs for the amount paid during this period. As a rule, the life insurance must have a term of at least twelve years for this purpose.
6 Are the services of a credit intermediary useful?
The employment of a credit intermediary is always useful in the search for a favorable real estate loan, especially with credit bureau entries.
The offer of a credit broker always creates noticeable added value for the consumer. Although in many cases it is also possible for you to find the best offer yourself, finding this offer will cost you a great deal of time.
A credit intermediary, on the other hand, can always offer you a suitable quote on your request due to its many years of experience in this field. This offer is made possible only by the versatile cooperation of a credit intermediary with numerous different banks. This gives the agent access to a wide range of services.
We help you to reduce costs
In addition to saving time, you continue to benefit from a reduction in costs. Many people still turn to the customer adviser of their own house bank and represent for this an easy prey. This does not give its customers a loan with particularly good conditions, but only a usual credit of the house bank.
As a rule, this one has particularly bad conditions, as the customer advisor often assumes that its customers do not compare the offer with the offers of other banks. A credit broker, on the other hand, works independently of a bank and always gives you the offer with the best conditions.
Finally, a loan broker also offers you some advantages over ordinary online loan comparison portals. A credit intermediary not only compares the offers of the individual banks, but also maintains close contacts with the representatives of the banks. In this way, the credit intermediary receives individual offers with particularly attractive conditions for its customers.
7 What effects does credit bureau have on the loan application?
The credit bureau score has a very large impact on the outcome of the loan application. Nevertheless, it is not impossible for bad credit bureau to get a real estate loan approved despite credit bureau. The credit bureau score is just a very important indicator that the bank uses to decide whether or not to obtain a credit agreement of the same order of magnitude.
On the basis of the credit bureau score, however, the bank not only decides whether to receive a loan from it, but also how high the interest on the loan will be. It should be noted that you generally receive lower interest rates with a better credit bureau score than with a bad credit bureau score.
This direct relationship between the level of interest rates and the credit bureau score exists because the bank uses the credit bureau score to derive the risk of default on the loan. With a low score, the bank assumes a high risk of default on the loan.
As this is therefore a risk business for the Bank, it requires a significantly higher interest rate. Each bank decides individually which risk it takes on a real estate loan. In part, large banks reject a loan application even with a base score of less than 95 lump sum.
On the other hand, even a minimal increase in the score can cause large differences in the interest rate. Due to the amount of the loan and the long term, these small changes can already make a difference of several thousand usd.
8th What problems can arise during the repayment term?
During the repayment period, you may be faced with major challenges.
Both the loan amount and the monthly loan installment are set at the beginning of the repayment term for the entire term. For this reason, changes in the monthly disposable income can lead to big problems.
One of the most common problems is the unemployment of one of the borrowers. In many cases, the monthly installments are made up of the income of both spouses. Here, the unemployment of one of the two spouses already presents the household with a great challenge. Switching from full-time to part-time employment can also cause these problems.
However, this danger can be prevented as far as possible. All you have to do is make sure that you do not exhaust the maximum monthly amount you could afford at the time. This will give you a hedge for periods of lower income.
In addition, you can also make a reserve to cover a short unemployment. Finally, a residual debt insurance offers comprehensive protection against the dangers of entering unemployment.
Mandatory repairs or modernization measures:
Another danger is major repairs and necessary modernization measures. These cause high costs and can thereby jeopardize the punctual payment of the monthly contributions. Here, too, it makes sense to make provision at an early stage and to make sufficient reserves to be able to bear these high costs.
If the monthly installments can not be paid despite sufficient precautions and reserves, rescheduling may also be appropriate in some cases at. In this way, monthly payments may be reduced so much that they can easily be repaid.
9 What are the advantages of rescheduling the real estate loan ?
Under certain circumstances, rescheduling the real estate loan can bring attractive benefits. However, the right time should always be chosen for this.
In principle, a rescheduling of the real estate loan is always possible if the fixed interest has expired. Although real estate loans are usually concluded with a term of more than 30 years, the interest rate is usually tied to its value only for a maximum period of 15 years.
After expiry of the fixed interest period, the interest rate may increase, thereby increasing the monthly installments. This point in time lends itself particularly well to a rescheduling, as this is usually waived on a prepayment penalty.
The rescheduling of the real estate loan can in many cases reduce the borrowing costs and the interest on the loan. In particular, you can profit from this if you have a real estate loan without interest adjustment clause, which was taken up in a high-interest phase. With these loans, you are tied to the high interest rates, even if the general interest rate lowers.
Umschulden and save money
With debt restructuring, you can benefit from lower interest rates and save a lot of money. However, you should be contracted for a prepayment penalty be bound, you must examine in detail whether the interest savings are higher than the additional costs due to the prepayment penalty.
Another advantage is that rescheduling in many cases creates new economic freedom. The real estate loan obtained through the rescheduling can have conditions that are very different from those of the original real estate loan.
For example, you may be able to make special repayments in your new loan. In this way, you can also use the new economic freedoms created by the lower monthly installments for special repayments to further reduce the cost of your real estate loan.
10 What should be paid particular attention when real estate loan?
When concluding your real estate loan, you should pay particular attention to the following important points:
fixed interest rate:
The interest commitment describes the period in which the current interest rate of your real estate loan is firmly tied to the agreed value. After expiry of the fixed interest period, follow-up financing must be agreed, the interest rate of which may differ from that of the original real estate loan.
The follow-up financing will be made directly after expiry of the fixed interest period. In most cases, you also have the option of rescheduling your real estate loan.
Amortization / special repayment:
The repayment rate is the portion of your monthly installment that is used to repay your loan.
Special repayment, on the other hand, is an extraordinary payment that is fully used to pay off your loan amount.
In some cases, a prepayment penalty may apply if you settle your mortgage before the agreed date. This is possible both through special repayments and debt rescheduling.