For many consumers, one of the most extensive and, in the long term, most important investments is the purchase of their own property. Families who decide to implement such a step are setting a stake that will likely affect their lives well into retirement. In addition to the financial provision for retirement that many property buyers expect from their investments, having your own home or apartment also means a lifelong commitment. Apart from maintenance and tax burdens, the owner is likely to be tied to the property and therefore to the location for life. All of this should be taken into account when future property owners consider such a project. In this article we have summarized what we believe to be the five most important steps that are of fundamental importance when financing such a house purchase. Even though we have tried to keep things in a chronological order, home buyers should always keep in mind that the individual steps can always overlap. And sooner than some people think, it's simply time to get back to work!
Explore your own financial options
The first step, which should actually be taken before any major purchase, is to thoroughly analyze your own financial possibilities. But unlike a car or an expensive piece of furniture, potential buyers should always be clear about how far-reaching their decision actually is. Financing a house purchase often lasts 25 years or more. A lot can change during this time and you should be reasonably sure that you will still have sufficient ongoing income at the end of the term to be able to meet your loan obligations. A particularly critical point is retirement. In any case, the mortgage should be completely paid off by then. In addition to paying off debt, buyers should also think about thissufficient capital for your retirementto build. It can be expected that no further ongoing costs in the form of rent will have to be paid for a house that will hopefully be debt-free at some point. However, this does not mean that the owners then live in their house completely for free. In addition to energy costs, reserves should also be built up for planned and unplanned maintenance. Costs for insurance, among other things, for the construction phase, but also for the property itself, should also be sufficiently taken into account.
Set the amount and term generously
If the future homeowners are clear about the scope of their project, the planning should be based on real figures. Specifically, you should ask yourself how long and to what extent the repayment of a possible loan can be managed without literally being financially exhausted. In any case, a lot of time and care should be invested in this process. For orientation purposes, platforms such as:Hauskreditrechner.infobe used. By entering various parameters, investors now get a feeling as to which house purchase financing is actually realistic for the house purchase. In any case, the purchase price should be calculated as generously as possible and a proper financial buffer should also be planned. Because if there is one constant in real estate projects, it is costs that exceed the original planning. This is not only the case with large public projects such as in Stuttgart or Berlin, but also often with private house builders. If the cost plan is adhered to, there is an opportunity for additional purchases or even a special repayment.
Once their own financial possibilities have been thoroughly calculated, buyers can now begin their targeted search for affordable properties. But here too, not just the purchase price should be taken into account. In addition, there is usually a fee for the broker and real estate transfer taxes. In addition, the move and the often necessary additional furnishing of the property with furniture or a new kitchen cost additional costs. Consumer advocates recommend adding at least ten percent, but preferably 15 percent, to the actual purchase price. In addition, the extent to which a new place of residence may lead to additional costs should also be taken into account. If there is no connection to local public transport nearby, you may need oneadditional carbe purchased. The time required, for example to drive children to school or to their hobbies, is not only extensive, but ultimately also costs money. Together with a real estate agent or with acquaintances and friends, these advantages and disadvantages of certain properties should be carefully examined. It should also not be forgotten that buyers are now moving into a different environment, which can also involve certain changes to their previous lifestyle.
Obtain offers from banks
At the latest when specific objects have been selected, it is time to contact a bank. In principle, however, it is definitely advisable to have the appropriate financing calculated in advance by a bank advisor. It is not uncommon to see that there is a certain gap between the computer on the Internet and the bank's offering. Against this background, it is strongly recommended that you ask different banks when looking for a loan offer. Of course, internet portals can also be used, which can at least provide a good overview of current offers. In contrast, it has so far been rather unusual for extensive real estate loans to be taken out over the Internet.
Compare the options thoroughly and objectively
If there are different binding loan commitments, it is now important to compare them as objectively as possible. This is not nearly as easy as it seems, as there are a number of different parameters to compare. The interest rate is an important, but by no means the decisive factor. The duration is also important. A short term with a low interest rate can have a detrimental effect on the borrower if follow-up financing is needed after around ten years and a large portion of the mortgage still has to be repaid. Nobody knows how interest rates will develop by then. A sharp increase in interest rates can quickly undermine follow-up financing. If you want to be on the safe side, choose the interest rate that is fixed for as long as possible. Borrowers should also consider the extent to which they have the right to make special repayments. If special income, such as an inheritance, is expected, a large portion can be repaid early and thus save a lot of interest. However, banks can often pay for special repayment rights with smaller interest surcharges. It is also highly recommended to spend some money on an independent advisor or visit a consumer advice center to find out which loan offer is really the most suitable for your individual needs.
As soon as it is clear which loan offer it should be, nothing stands in the way of signing. It is also important that the loan conclusion and purchase are not too far apart. Interest is usually due at a contractually agreed date, even if the amount has not yet been paid out or has only been paid out in part. If all the steps mentioned here have been taken into account in detail, the credit customers can now plunge into the adventure. If all the conditions are correct and a sufficient financial buffer has been taken into account, the homeowners should now be able to benefit from their decision for as long as possible.
