This is how you find the right construction financing
Finding the right construction financing is a mystery for many future homeowners. The range of different options on the market is too large. A question that will probably arise: Which construction financing suits me and my project? Fortunately, there are various options for realizing and financing your dream of owning your own home.
annuity loan
This method is most often used to finance your own property. A bank grants the loan, which is paid off in fixed monthly installments. The annual rate (annuity) of interest and repayment is divided by 12 calendar months, with the amount of these rates remaining constant over the entire term. Sufficient equity is recommended here so that the amount of the loan is lower and less money has to be raised for interest. The lower your own assets, the higher the bank usually sets the interest rates. A plus point here is the interest security, since the interest rates remain unchanged over the entire term. However, this option offers little flexibility unless the annuity loan is invested for different terms.
full financing
If little or no equity could be saved, full financing can be the right construction financing. With this option, however, the borrower should have an above-average income, since the lender will help finance the lack of equity and the ancillary construction costs. However, this is reflected in high interest rates.
home savings contract
The home loan and savings contract is a popular means of building finance. It enables equity to be invested at an early stage. To ensure that the equity capital is as high as possible, it is advisable to conclude a home loan and savings contract at a young age. An advantage of the home loan and savings contract is the tax subsidy from the state, since the employee savings bonus and the housing premium can flow into the financial product. There are considerable differences in the tariffs of home loan and savings contracts, which is why a comprehensive comparison is a must.
KfW funding
The support of a loan from the KfW bank can be particularly valuable for construction financing. This grants grants through various programs subject to certain conditions. Projects for age-appropriate conversion, an energy-efficient building and the use of renewable energies through solar power storage and photovoltaic systems are supported, for example, by the KfW bank with grants. Before starting new construction or refurbishment, it is important to first apply for funding from the KfW.
The station wagon does it
If the right option cannot be found immediately, a combination of different options could be the solution. For example, a combination loan can be the ideal middle ground. The borrower is granted an instant loan and a home savings contract over the entire term. This method is particularly attractive when it comes to short-term construction financing decisions.
If funding through grants is an option, a merger between the KfW bank and other options such as equity and annuity loans may be the right choice. Which type of construction financing or possibly even a combination of several options is the right one can best be determined after assessing your own financial situation and personal future planning and should be well thought out in advance. If the desire to own a home arises at a young age, a home loan and savings contract is recommended. It enables an early investment of equity. If the dream of owning your own four walls came about in the short term, full financing or a combined loan could be an option. In all cases, it should be checked whether there is a possibility of funding from the KfW bank.