Tips on construction financing – how to save money

Construction financing

There are two sides to saving money when building a home and therefore two options: Homebuilders can reduce money on the expense side and gain money on the income side. The article below deals with both forms and thus provides information on the extent to which money can be saved in total. The following 5 tips are possible.

5 tips to save money

The tips below cannot apply to all home builders, as the choice and background differs where the prospective buyers want to build their house and which house they decide on. Nevertheless, all tips are listed for the sake of completeness.

Tip 1: Arrange unscheduled repayment

In the course of the construction financing sometimes financial sums become additionally free, which are expected or also unexpectedly added. An expected sum could be, for example, in the form of life insurance or other savings investments. It is important with this that they are not canceled, because that gives losses on this plant, which can have an overall negative impact on the total house construction costs. Therefore it is to be seen, when the sum becomes free, in order to be able to use it then as special repayment.

Tip 2: Prefer fixed interest rates

Long fixed interest rates are preferable, especially when current interest rates are low. That makes the installment payment for the house builders on a longer period better calculable. In addition, in the case of long terms, they can also terminate the contract after a large part of the term, in accordance with §489 BGB. Thus applies at least a possibility after 10 years this to be able to lift.

Tip 3: Bring the largest equity possible

The higher the house builders can bring in an accumulated equity, the higher the repayment and interest lower. Therefore, the house builders should best save up beforehand between 15 to 20% of the construction sum before entering into the actual construction financing with a financial institution.

Tip 4: Apply for subsidies

Depending on the type of house, there are different subsidies that can be accessed by home builders. So you should go for the best energy efficiency if possible, although these houses are also the more expensive ones. However, this is worthwhile compared to the additional subsidies and such costs that can be saved later in the use of electricity. A further means of promotion is to be seen in the building child money, which can apply the house builders likewise with the KfW. The basic prerequisite here is that children under 18 years are present and the property is used for own living.

Tip 5: Do not choose combi models

The best form is not to choose combination models. This means that it is better to aim at paying off than to pay extra into a savings scheme. Because the interest on credit balances is lower than the interest on repayments that the savers have to pay for the loan repayment. However, if the facilities are already completed, they must clarify whether the contract can be terminated without losses. Then it is better to continue to pay this or non-contributory if they can not bear the double burden.

Conclusion on construction financing

The aforementioned aids are important that homebuilders can free up additional resources. It is first important that they correctly assess their financial situation and always build in a buffer. Because additional expenses can always arise. That is why they must never calculate too tightly and calculate the repayment to the limit.

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