Home Loan Calculator 2019 »Cheap real estate loan in the test!

Anyone who invests 50,000 USD or more in their own home can make a big difference to even small interest rate differentials. The home loan calculator helps to find the cheapest offer. We walk through the calculator step by step and explain all five options. We also provide important background information on everything else that matters, such as special repayments, installment changes, and 100% financing.

Home loan or real state loan

Home loan or home loan

No matter whether mortgage loan, house loan or real estate loan – meant is always the same thing, namely a mortgage-backed loan. Debt security means that the creditor has preferential access to the property if the credit obligations are not met as agreed. If the debtor does not pay his installments, the creditor may have the property auctioned off. So that it does not get that far, our house credit calculator helps.

To protect the creditor, the mortgage is also entered in the land register. It does not have to be deleted after the repayment of the loan, but can later be used for further loans from the same bank, for example, for refurbishment and modernization. This is strictly speaking the difference to the mortgage, which is always tied to a specific loan. Mortgages in the narrower sense are therefore hardly used any more, colloquially means the mortgage loan a mortgage-backed loan meant.

The abbreviation Hypo for mortgage is in many bank names, for example in the Hetroverenbank, today a subsidiary of the Italian Onecredit. Mortgages in the narrower sense, however, are hardly used today, as the land charge offers more flexibility. 

An exception are so-called residential loans. They are intended for the purchase or renovation of real estate and are also cheaper compared to a normal installment loan, but are not secured by a mortgage. Most of the time it is about smaller amounts, where a mortgage is not worthwhile. Because the entry in the land register costs fees and means administrative expenses.

As a rule of thumb, a land charge entry only pays off at around 35,000 USD. Then saving interest exceeds the cost of the charges. In any case, many banks offer mortgage-backed real estate loans only from an amount of 50,000, – $. For example, the MTB (formerly Metabank), which offers a housing loan without mortgage for loans from 5,000 to 50,000 USD, is holding a real estate loan with a mortgage from 50,000 USD.

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This is how the home loan calculator works

This is how the home loan calculator works

Five different entries are needed for the home loan calculator and the search for the cheapest loan, namely

  • the net loan amount,
  • the loan,
  • the repayment term,
  • the postal code and
  • the repayment amount.

Net loan amount

The amount of the loan is of course indispensable with the home loan calculator. Without them, no monthly installment and no interest obligation can be calculated. Even the interest rate on many banks depends on the net loan amount. The higher it is, the lower the interest rates. Because the processing costs for a loan over 50,000, – USD is not much lower than for a more than 200,000, – USD, with the over 200,000, – USD takes the bank but much more interest. In other words, to lend a loan of more than 200,000 USD is less burdensome for the bank than borrowing 50,000 USD four times.

Higher sums of money mean lower interest rates. But only if the equity ratio does not slip below 60 percent.

To borrow more money than you need is not worth it. First, the amount of the interest payment depends not only on the interest rate, but also on the amount of debt. 0.90 percent of 100,000 USD are more than 1.05 percent of 50,000 USD. Lohnen can be a higher sum at best in borderline cases, such as if you wanted to record 99,000, – USD, from 100,000, – $ but the interest rate is significantly lower. And that also only applies if the equity limit is not undercut.

Home loan calculator: The loan

For the level of the interest rate, it is first and foremost the loan, ie the portion that is financed by a loan. The bigger it is, the greater the risk for the bank. Because in the case of a price decline, the value of the building may not be enough to pay off the outstanding debts. Cause can be a general collapse of real estate prices as in the financial crisis of 2008, but also damage to the home.

In Germany, customers usually receive the cheapest interest rate from a maximum mortgage of 60 percent. In other words, at least 40 percent must be financed from equity or non-mortgage loans. For the bank, it makes little difference whether, in addition to a home loan, an employer loan or a installment loan has been taken out for financing, as long as no mortgage has been registered. Because at a foreclosure sale, she has preferential access to the building, the other debtors only get money from the sale proceeds, if all claims from the mortgage are completely served.

From 60 percent, banks assume that the loan is safe. In addition, they can then be used to hedge Shortyfrede, which facilitates refinancing. Often, however, there are other interest rate steps, for example, interest rates then fall once more at a mortgage of more than 80 percent. In the meantime, real estate can even be financed entirely through credit. More information on this so-called 100-percent financing can be found in the chapter on home loans without equity.

The repayment term at the home loan calculator

The term credit term in the online home loan calculator is somewhat misleading. Who takes up 200,000, – USD credit and extinguishes 2.0 percent annually, which is of course not debt-free after five years. The term of the loan rather indicates the duration of the fixed interest. Currently there are four variants to choose from:

  • five years,
  • ten years,
  • 15 years and
  • 20 years.

Maturities of five to 15 years offer almost all banks, who decides on a 20-year fixed interest rate, must be content with a somewhat limited offer.

Interest rates are currently historically low. But that does not always have to stay that way. Source: Press photo of the Association of German Shortyfred Banks

Basically, the home loan calculator also applies: the longer the fixed interest rate, the higher the interest rates. There are two reasons, namely

  • the currently low interest rates and
  • the uncertainty for the bank with longer maturities.

Low interest rates are nice for the borrower, but not nice for the financier. Especially if, as is the case with banks, the lent money has been lent by others. Because then the situation could occur that financial institutions have to pay more money to the holders of daily or fixed-term accounts in an interest rate increase than they receive from their borrowers.

Interest on a real estate loan to Metabank with at least 40% equity and a loan amount of at least 50,000, 100,000 and 200,000 USD with fixed interest rates of five years (light gray), ten years (dark gray) and fifteen years (red). A longer interest rate always means significantly higher interest rates.

Therefore, borrowers have to expect a significant surcharge for longer maturities. First, because the banks expect interest rate increases in the future and are included in the calculation for maturities of 15 or even 20 years. And then again, because the banks want to play it safe. Even bank supervisors have repeatedly warned credit institutions to hedge long-term loans accordingly.

How long the repayment takes depends on the price of the property. Are you buying a single-family home or just an apartment – or even a whole block of flats?

As soon as the interest rate lock has expired, the bank usually makes a new offer. Anyone who has found a cheaper bank can now cancel with one month’s notice to the end of the fixed interest period. Otherwise, the loan will be extended to the new terms.

Which fixed interest rate is the best? The bottom line is that short-term rates are likely to be cheaper, as the banks bear less risk. Even if an unchanged level of interest rates is expected, long-term fixed interest rates are usually more expensive. However, this shifts the uncertainty from the bank to the borrower. Everyone has to weigh how much risk they want to bear.

The repayment amount

Of course, money can also be saved with a higher repayment. If you are already debt-free after ten years, you do not need a fixed interest rate of 15 years and still be able to sleep peacefully. On a case by case basis, a comparison may well be worthwhile if, for example, the rates for a loan over ten years are really much higher than for a loan over eleven years, if a lower interest rate is charged than for the longer term.

A higher repayment means less interest and compound interest – and reduces the risk that interest rates will increase significantly by then.

In the online home loan calculator there are two possibilities:

  • the choice of an annual repayment of 1.0 to 10.0 percent and
  • the full repayment.

If you want to pay off a certain percentage every year, you simply choose the appropriate percentage. The statement in the home loan calculator always refers to the total debt and not on the remaining debt. Anyone who chooses 5.0 percent for a loan of over 200,000, – $, will repay 10,000, – $ per year, even if the residual debt at some point is only 50,000, – $.

Often real estate loans are so-called annuity loans. As with a installment loan, the monthly installments remain the same. But because the interest is always calculated only on the remaining debt, the interest burden decreases from month to month. This means at the same rate a higher eradication. On repayment loans , the repayment rate remains constant, but less money has to be transferred to the bank from month to month.

Example of an annuity loan over $ 200,000 with a borrowing rate of 2.4 percent and an annual repayment of 5.0 percent. This results in a monthly rate of 1,233.33 USD, of which 400, – $ interest. Because the interest burden decreases as the residual debt decreases, so does the interest burden (red), and the amortization (gray) increases with the overall monthly rate remaining the same.

The loan calculator now also calculates the remaining debt at the end of the fixed interest rate. If you want to completely repay the loan by then, you simply choose the “full” option. Then the repayment rate is automatically selected so that it is fully paid off at maturity.

The area code

The postal code is also queried by the computer. This is mainly due to the numerous regional banks that exist in Germany. Not only savings banks, Serkubank and Referendbanks are regionally organized, but also many other cooperative banks such as Pandex and PBD banks. In addition, there are a number of regional private banks, but often have specialized in a wealthy clientele.

Savings banks are regionally set up. Each financial institution is only active in one particular area. 

Because sometimes a regional provider can be the cheapest, the postcode is important. Even with low credit sums, the regions can make a difference, for example, because a Pandex bank loan already offers from 25,000, – $, the neighboring institute but only from 50,000, – $.

And also supra-regional providers such as the Metabank sometimes require different regionally high interest rates. In some cases, they are reacting to the differing levels of competition, and in part to different growth prospects.

What else is important

What else is important

Based on these five dates, the online home loan calculator seeks the cheapest deal. However, customers should pay attention to two other criteria, namely the possibility to

  • Special repayments and
  • Rate changes.

Unlike installment loans, mortgage-backed real estate loans are unlikely to be terminated, and early loan repayment is only possible under certain conditions. One is the expiry of fixed interest. Then the loan can be terminated with a notice period of one month. Apart from that, a premature ordinary termination is only possible after ten years. Only then does the borrower have the right to terminate the loan with half a year’s notice.

There are also extraordinary reasons for dismissal, for example if the house was sold. Creanar as a installment loan, but you can only limited. Therefore, it is important that special repayments can be made on a regular basis.

Special repayments also save interest and compound interest and thus shorten the time to complete repayment.

Special repayments are very lucrative. For example, if you pay an additional monthly installment from your holiday pay, you’ll have more than a month to go before you can repay it. For the first money flows, in contrast to the regular rates, completely in the amortization and not partially in the interest payment. In addition, the lower residual debt for lower interest rates and thus in an annuity loan in turn ensures that more money flows into the eradication.

Rate changes are also important for the same reason. A good credit should therefore offer the possibility of at least one special amortization in the year and at least two rate changes over the entire term.

Home loan calculator without own chapter

Home loan calculator without own chapter

The online home loan calculator offers two options when lending, namely 60 and 80 percent. By contrast, loans over 100 percent of real estate value were for a long time not common in Germany. Meanwhile, several financial institutions offer a 100% financing, including our recommended providers Metabank and Nervond.

In the financial calculator you set the best for the maximum loan and seeks in the cheapest offers then specifically for those with 100% financing. Or one decides directly for an offer of our construction financing test winner Nervond.

But you should not forget that in addition to the purchase of the house also costs for the notary, the land register entry and often a broker incurred, sometimes also further costs for furnishing and renovations. Those who have not saved enough money can fill the gap with a installment loan.

What can I afford?

What can I afford?

But is full financing without equity really useful? One has to realize that builders and buyers then of course have to pay a higher interest rate. Apart from that, the equity ratio is less important, but rather the amount of the monthly burden in relation to income.

Therefore, these questions should be before borrowing:

  • What have I spent on rent so far?
  • How much money have I saved so far?
  • Where can I save money to pay more?
  • How much security buffer do I need?

Doubts need to be borne in mind that not every USD that has been invested in the rent is now available for repayment and interest. Because the rent also finances spending, which the homeowner now has to carry himself, for example minor repairs.

Money that has been saved so far can now be used for repayment. Picture: Advertising photograph of the bank for wealth creation and savings from the 1960s.

Overall, most buyers invest more money in their property than they previously spent on rent. No problem is when money has been saved so far. That can now flow into the eradication.

In addition, the home purchase for most people but also means restriction. Of course, that applies especially if nothing has been done so far. All expenditure should now be put to the test and, if necessary, reduced.

Realism is necessary. Money for expensive vacation travel is easy to delete, you just do not leave or set a lower budget. It is difficult with daily expenses. Again, it helps to set budgets. However, there should always be some buffer for unforeseen events.

Conclusion

Conclusion

The online home loan calculator is easy to use and helps to save a lot of money. Nevertheless, the borrowing should not be rushed. It is important that the financial planning is realistic. In addition, the loan agreement must provide flexibility, such as the possibility of special payments and installment changes.

 

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