Application and expiry of an annuity loan
The annuity loan is generally considered to be a classic type of financing when buying a property. This is mainly due to the fact that such a loan, because of its constant, monthly installments, very clear and thus easy to plan. But how exactly an annuity loan is requested and how it runs, there is often confusion.
The process of an annuity loan is usually the same:
1. Select a loan offer : First of all, a favorable loan offer is sought. Care should be taken to ensure that the credit institutions contacted in this regard notify a condition inquiry and not a credit inquiry to the Schufa. Because while the latter is stored there, this is not the case with a condition query.
2. In order for the bank to be able to make an individual loan offer, it is necessary to provide not only the planned financing amount but also its own financial background. Once that has happened, which is a credit institution to assess a corresponding thereto borrowing rate.
3. The next step is to fix the interest rate commitment. Here, the borrower usually has the choice between a different number of years. For example, debit interest rates of ten or even 15 years are typical. It should be noted that the interest rate commitment can not be changed during the agreed term . Accordingly, it is useful, for example, in a low-interest phase, to select a very long debit interest rate, while in times of high interest rates, it is advisable to recommend a shorter binding time; if it is foreseeable that interest rates will again be lower in the future and will not rise even higher.
4. Amortization : Just as important as the question of interest rate maintenance is the question of the amount of the repayment installment. It should be carefully considered how high the repayment should be in the first year of loan repayment.
As a rule, one percent is started here. Much better, however, is to agree at the beginning on an annual repayment of approximately two or three percent.
The reason for this is simple: the higher the initial repayment rate, the faster the remaining loan debt will be repaid and the less interest paid over the next few years. However, the eradication or the entire monthly rate should of course still be easily affordable.
5. Then you have to determine the monthly rate. In addition to the loan amount, the borrowing rate and the initial repayment rate also plays here repayment term an important role.
However, it is quite easy to calculate which installment can be handled without problems during the month. So it is best to create a so-called budget before the bank conversation. In this all regular and irregular expenditure of a month are deducted from the respective revenue. The resulting sum is at your own disposal and can therefore also be used to repay the loan .
However, it is advisable not to use the full amount for loan repayment. After all, it can happen that you suddenly need a larger sum in one month, which then has to be present. This is the case, for example, when the old refrigerator refuses service and it is therefore necessary to buy a new appliance.
6. Before the annuity loan is definitely completed, you should also ask for other special services; if the bank does not already respond to this on its own initiative.
For example, some banks offer the possibility of free special repayments. In this way, in addition to the actual monthly installment, it is possible to make partial payments that reduce the loan debt and thus generate less interest.
However, a variable repayment rate can be very practical, which is generally adaptable to one’s own financial situation.
Similarly, suspending a monthly installment in an emergency can often be quite a relief.
7. After everything has been clarified with the bank, you will receive a confirmation of financing or a financing commitment from the bank, so that there is no longer any obstacle to buying the desired property .
8. The acquisition of the house or the condominium is then completely settled by a notary and the buyer is registered as the respective owner in the land register.
The existing equity should cover at least the purchase costs.
With real estate financing, most banks also require that equity be available at a certain level. Usually this is required here that the amount is at least sufficient to cover the purchase costs, such as notary and land registry.
However, this does not necessarily have to be cash. For example, it is also possible to bring in a life insurance policy or a home savings contract.
In general, the higher the share of equity, the lower the loan amount will be and correspondingly less interest will have to be paid.
If it is not possible to meet the various requirements, for example, a guarantor or a second borrower can help.
However, in order for an annuity loan to be sought, it is essential that the applicant meets the various requirements of the banks. In addition to a secure, regular income, this also includes a good credit rating and a positive Schufa information. Furthermore, the prospective borrower must be of legal age. Likewise, a high value is usually placed on a German residence and a German checking account.
However, if it is not possible for the applicant to meet the various requirements, it is not essential to refrain from borrowing immediately.
In such a case, it is either advisable to involve a second borrower or even a guarantor. If the respective person fulfills the various bank requirements, then it is generally no longer a problem to receive the annuity loan.
However, the guarantor or the second borrower must be fully aware that if the actual borrower is unable to pay the monthly installments, he or she will be liable. This means that he has to take over or pay the entire remaining loan debt.
An annuity loan benefits from various advantages, such as a high level of planning security.
An annuity loan offers two major advantages to borrowers. This includes above all the high planning reliability of the loan. So it is already known to the applicant at the conclusion of the financing contract, how high the monthly rate fails, which must be paid regularly in the next few years. There are no surprises here.
In addition, it is possible for an annuity loan for a certain time, to agree a fixed debit interest. Thus, the interest rate during this period always remains the same and does not change.