Real estate loan comparison is important in order to get the best home loan offer. When comparing loans, it is advantageous if you already have some important information about the property at hand. This includes, for example, the amount of the loan.
When comparing loans for real estate, the future home buyer will be able to see which bank offers the cheapest interest on a real estate loan.
Current mortgage rate
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Equity (customer’s available funds)
- The difference between these two numbers is the amount of the loan amount required. Assuming a property costs 350,000 USD and the existing equity capital is 150,000 USD, a loan of 200,000 USD is needed to make the loan comparison to make the purchase.
In principle, the conditions become better as the amount of equity increases. Experts recommend contributing at least 15 to 30 percent of the purchase price as equity .
Which factors are still relevant for the loan comparison?
In order to find the right offer, various things should be determined before starting the financing. For example, the following factors play an important role in the terms of a loan:
- What term is planned for the loan?
- What is the maximum possible loan rate?
- Can special repayments be made?
The shorter you choose the term, the lower the interest on the loan. The amount of the monthly loan installment also influences the conditions, because the more the customer can repay each month, the earlier the bank has the loan amount back. Many banks also give customers the option of repaying the loan more quickly with special repayments. Particular attention should be paid to this when comparing loans.
Obtaining money for special repayments or refraining from vacationing for the duration of the loan can make it easier to repay the loan amount.
- Financial planning that is as precise as possible and honest self-assessment of personal circumstances are less likely to cause problems during the repayment of a loan. However, not all details can be considered in advance, so a property purchase should always be planned with enough scope.
Pay attention to fixed interest rates, which should be as long as possible. This means that if interest rates rise in the meantime, there are advantages in follow-up financing, since the remaining amount, which is then charged with higher interest rates, is no longer as high.
The APR and its importance when comparing credit
Of particular importance in the credit comparison is the effective annual interest rate, which, in contrast to the borrowing rate, not only includes the actual loan interest, but also other costs such as processing fees, commissions, or repayment or interest offsetting. It is important to pay attention to the digits after the decimal point, because with every digit after the decimal point the customer can save a five-digit amount if he buys a house or other real estate.
- If you accept a loan amount of 200,000 USD again, the customer can save around 22,000 USD with a 20-year fixed interest rate if he goes to a provider whose interest rates are only 0.5 percent lower than those of a competitor. A comparison in terms of APR is definitely worthwhile.
Why is credit comparison so important?
Many have the dream of owning their own four walls, but not everyone has such extensive funds that they can pay for a property in cash. Younger people, single people or young families, in particular, need to save and budget with their financial resources. This is especially true when taking out a loan to buy a property. Here, a loan comparison using a comparison calculator can be very useful because it shows whether the financial situation is good enough to be able to repay a loan.
- Use our free and SSL certificate-protected home loan calculator to easily compare different loan offers.
People who have a low income, have little or no equity and still want to buy a house or other real estate (e.g. condominium) can find out about subsidies from the state or full funding. These can be included in the calculation of the conditions. However, the loan comparison will show that full financing is significantly more expensive than financing with existing equity. If the loan comparison shows that you cannot get a loan in the current situation, you should postpone the project and start when the financial situation has improved.