A low interest rate on mortgage lending is important. After all, it’s about a large loan amount and a long term. Anyone who compares cleverly and chooses a loan with good conditions can save a lot of money in the medium and long term through the interest rate advantage.
But the interest rate is not the only criterion that matters in mortgage lending. There are other factors that we have collected for prospective property owners below.
Strictly speaking, a low interest rate is only half the battle. It helps a lot if it is only valid for a short time and at the same time only a small removal of the remaining debt takes place. Thus could already threaten at the first follow-up financing a handsome increase in financing. Perhaps the rate is so high that the entire mortgage lending is at risk.
That’s why it’s crucial to think about interest rate security right from the start. The aim is to take measures that guarantee a consistently low interest rate and thus make the borrower immune to an increase in market interest rates. The spectrum of concrete measures is wide-ranging, and various financial solutions are available on the market. Which of these are the best for your financing, our independent consultants are happy to check for you.
There are banks that firmly bind their customers to mortgages. Due to complex financing structures, it is possible that a switch to other banks is almost impossible. Say the customer will finance from start to finish on one and the same lender.
In principle, this does not have to be bad, but there is a risk that the bank will ultimately dictate the interest rate and thereby increase the cost of mortgage lending. It is therefore better if you remain flexible as a borrower and can easily change the lender at selected times. A change does not have to be planned, but at least the possibility should exist.
Just as important as the stated independence is sufficient flexibility in repayment. Living conditions can change, which, for example, has an impact on income. The effect can be two-way, and suddenly more money is available, but on the other hand, income could also be reduced. In both cases it is an advantage if the loan offers sufficient flexibility.
A great way, for example, is to adjust the repayment rate. This can increase or lower the monthly rate. Likewise, it may be beneficial to make special repayments. But both options are not self-evident. It is necessary to consider, before signing the loan agreement, whether such adjustments of financing are permitted. The same applies to securing an early exit from the loan because, for example, a job-related move is pending.
In addition, borrowers should think about a sufficiently large financial buffer. If you put your entire savings into the property, you are taking unnecessarily high risks. Possibly suddenly money is needed to settle an unexpected and at the same time high bill. For such cases, it should be prepared. A financial buffer ensures that you do not have to worry about it right away. In addition, it can be avoided by borrowing and at the same time the money is available immediately.