With favorable building interest on customer catch

Correct financing

How banks use favorable interest rates to attract customers?

Banks are cleverly using a favorable construction interest rate to attract customers. Buying real estate or building was rarely as cheap as now. A low interest rate for construction loan and mortgage, as well as government subsidy programs make a real estate purchase more attractive than ever before. But the bottom line is that the construction interest rate is usually not so favorable. Have you ever looked closely at such a prospectus? The information on the construction interest is always marked with an asterisk. In addition the reference "Sufficient creditworthiness presupposed". So, or so similarly formulated. In plain language: Only those who have a first-class credit rating, in the opinion of the bank, get such a construction interest rate.

Why you do not get a top construction interest

As a rule, only those customers receive a top construction interest rate, who usually do not need it. So builders with high equity without unscheduled repayment and other extras. If one lets itself make a personal credit offer of the bank, then the personal building interest is far from higher. Often it lacks sufficient own capital funds, in order to receive a top building interest rate. In addition, there are still considerable costs, which are called ancillary purchase costs. Far too often, these costs are not sufficiently taken into account in financing. Additional purchase costs are land transfer tax, notary, land register and broker, if you have hired a broker. Thus come fast between 5 and 12% of the purchase price at purchase additional costs still in addition.

If one adds now still another own capital funds of 50 per cent, then you should be able to raise at least 55 to 67 per cent of the purchase price at own capital funds. Then you have a real chance to get a top construction interest rate. For normal consumers, the chance to get such a top construction interest rate is almost zero. For us, a clear case of bait interest offer. What is the use of suggesting a favorable construction interest rate to the consumer, if he does not get it?

The credit rating and the interest rate

The requirements for creditworthiness are becoming increasingly stringent. The lower the credit rating, the higher the construction interest rate. The banks justify this with an increased risk. Consequently, neat risk surcharges are added to the construction interest rate. But also extras and special requests drive up the construction rate.

Construction loan with expensive construction interest rate due to interest surcharge

Extra wishes in the construction loan cost extra and are included as an interest surcharge in the construction rate. Example: Interest surcharge in the construction interest

  • Interest surcharge for a building loan up to 150.000 € of approx. 0.1 percent
  • Interest surcharge for a building loan up to 100.000 € from ca. 0.15 percent
  • Annual unscheduled repayment of 5 to 10 percent costs from 0.05 to 0.25 percent.
  • Interest surcharge for properties that are not located in metropolitan areas 0.05 to 0.15.
  • Self-employed and freelancers get an interest rate premium of 0.1 to 0.3 percent.
  • Interest surcharge for construction loans with a fixed interest rate longer 10 years cost between 0.6 and 2% etc.

The list of interest markups can be continued indefinitely. The amount of the interest surcharges can be very different from bank to bank. But it does not help. The more offers you get, the more expensive your building loan will be. But a building loan comparison is worthwhile in any case. If the construction interest rate differs only by 0.5%, with a term of ca. 15 years and a building loan of 180.000 euros, you can quickly 10 to 15.000 euros in construction interest savings.

The best interest rate for your construction loan

Before you get a construction loan offer, you should determine a number of key data on their construction loan:

  • How much money do you need?
  • How high may my credit installment be?
  • In which period you want to claim the building loan?
  • Can you make unscheduled repayments?

Only with exact conception and concrete basic data building loan offers and building interest are comparable. Everything else is wasted effort.

Building loan tip: favorable building interest

Take the help of the consumer centers. Such a consultation is non-binding independent but unfortunately not free of charge. The consulting fee amounts to approx. 100 to 200 euros. In comparison, the benefit you get from such a consultation is enormous. For good advice and a tailored construction loan with a favorable construction interest rate, these 200 € are well invested. This fee is with a favorable building interest quickly again in it.