What is a home loan? Measures to renovate, modernize or expand your home are expensive. The purchase of furnishings can also cost money. Own resources are often insufficient and the planned measures cannot be implemented without a loan.
On the other hand, the credit requirement is usually not that high. The effort associated with a cheap mortgage loan is therefore not worthwhile. Apart from that, if you take out a small mortgage, first place may be given away; bad if a larger loan is planned later.
In such cases, the house owner often only has the option of taking out a normal installment loan with relatively high interest rates. However, this is not an optimal solution. There was actually no custom-made loan solution for renovation or modernization measures. This gap in credit supply has been recognized by some banks and they are now offering special home loans. These are actually normal installment loans, but they are earmarked.
According to the banks, this earmarking leads to particularly favorable loan terms adapted to the planned measure. Interest rates are still somewhat higher than for mortgage loans.
As a rule, no land charges are entered. Apart from assignments of wages, no further security is required. Some banks offer residual debt insurance that can be taken out voluntarily. As with consumer loans, however, residual debt insurance makes every home loan noticeably more expensive, so that it is generally not recommended to take out a loan.
Home loan comparison
The comparison takes into account cheap offers, especially from direct banks. In order to access the providers, the “Housing loan” function must be set using the drop-down menu. The desired terms and loan amounts can then be selected.
The comparison form takes you directly to the loan application of the selected bank. The representative example given is helpful for a rough assessment of the current interest burden.
The credit comparison calculator is our recommendation.
Thanks to a new technology for the rating process, he estimates the feasibility of the loan request in real time. Customers immediately find out whether the payout opportunities are top, very good or normal.
This simplifies loan comparisons and speeds up the process of lending.
Loans with maximum amounts between USD 20,000 and USD 50,000 are the rule for residential loans without a land register entry. The minimum amounts are USD 5,000 or USD 10,000. Maturities between 12 and 84 months are offered, sometimes maturities up to 120 months are planned.
They are often loans with fixed, uniform interest rates. Everyone who receives a loan gets it at the same interest rates. However, a prerequisite is a minimum credit rating, the criteria of which banks set differently. If this minimum credit rating is not given, there is no loan.
The conditions of the banks in detail can be determined using the recommended comparison calculator. The given representative example provides clues. To determine the conditions actually granted, however, specific credit inquiries are required, which can be carried out free of charge and without obligation with the comparison.
Online credit inquiries are generally evaluated as condition inquiries and should therefore not have a negative impact on the creditworthiness determined by credit rating. These loans are generally secured by assigning wage and salary claims.
The applicant must be the owner of a property and provide ownership. Many banks also finance measures on foreign real estate if the owner lives in the country.
Due to the purpose of the home loan, regular evidence of the planned or implemented measures is expected. Some banks require own funds, other financial institutions grant residential loans without equity. Sometimes the existence of own funds has a favorable effect on the interest rate level.
As with other installment loans, the housing loans are tailored to permanent employees or to civil servants. Fixed-term contracts must cover at least the term of the loan applied for.
Advantages and disadvantages as well as alternatives
If larger amounts are needed, mortgage loans can be cheaper, although they involve ordering and entry costs. However, favorable conditions are generally only granted if a land charge can be used to secure them in the first place.
In addition to mortgage loans, consumer loans are also an alternative to residential loans. They are somewhat more expensive than earmarked residential loans, but can be used more flexibly without proof of use.
As a rule, residential loans can be repaid prematurely without prepayment penalty, and / or free special repayments are permitted. This flexibility is a huge advantage over mortgage loans.
A good solution for the external financing of measures on residential buildings is the forward-looking conclusion of home savings contracts for relatively small sums. Home loan loans are still very cheap. However, the contract should be ready for allocation. The frequently offered pre-financing makes the home savings contract more expensive and is therefore not recommended.