Building money with or building money without equity? Have you finally found your home? And you intend to sell it? Then it is now time for you to see if construction money is needed. Classic construction loans are mortgage loans. These loans are secured by a land charge in the land register. If the borrower is unable to pay, the bank can then sell the property. The annuity loan, with equal monthly installments and a fixed interest rate, is the most common form of mortgage loan chosen by the vast majority of people. We have listed many tips for you on the subject of building loans. Read them here.
What are the tips when it comes to construction loans?
First, briefly summarize the tips before we begin:
- Tip 1: Do not set the construction loan too low
- Tip 2: Look for a favorable interest rate when choosing construction loans.
- Tip 3: Make building loans possible without equity capital
- Tip 4: Make sure you know your right of withdrawal sufficiently
It is now time to explain the tips. Finally, a house can be associated with significant additional costs. Many builders face the problem of not having enough loan money to cover the cost of construction shortly before completion. Therefore, it should be negotiated as generously as possible. This is the first tip. To the second. With the interest rates for construction loans every tenth percentage point is at stake. Because even the smallest differences ultimately amount to considerable amounts. The current interest rate on construction loans depends on your equity percentage, the value of the property and your credit score, among other factors. Characteristic of construction loans is the multi-year fixed interest rate. A third tip is to allow construction loans without equity. Consumer advocates recommend saving at least one-fifth of your own capital before applying for a construction loan. But real estate financing is also possible without equity. However, the risk of non-payment is higher, and in this case the bank may charge a higher interest rate for the building loan. As a borrower, you must have a secure job and a high income.
What are the latest tips and what else should I do?
As a fourth and final tip, we would like to mention the following. After ten years, the borrower has a legal right to cancel his construction loan. The contract can therefore be terminated with six months' notice. The remaining debt must be repaid by an unscheduled repayment, or the consumer negotiates a new loan for his construction loan. We take a trip, because you can also imagine a building deposit for building money. A construction deposit is a separate account that is used only to pay for the construction costs of your home. You borrow money from the bank, which is placed in building deposit for a maximum of two years. If you incur costs during renovation or construction, send the invoices directly to the bank. The bank then pays the bills directly from your building depot. If you pay part of the costs yourself, this amount will be transferred to your account by the building custodian. The interest on the money in the deposit is slightly lower than the interest you pay. And what costs are included in a building deposit? Costs are limited to what is actually used for construction or renovations. So this is the cost of any fixed items you can't take with you when renovating. For example, you can pay for a tiled floor from the building deposit, but not for curtains that are hung. The costs you make for the builder and the electrician can also be paid from the building deposit.