Pay attention to interest rate trends when calculating mortgage lending

Pay attention to interest rate trends when calculating mortgage lending

Small mistakes, big impact. This is roughly how the calculation of mortgages of many families can be described. Since it is an investment for life, must make no mistake. Banks and other providers are not necessarily making things easy for consumers. They often attract with attractive offers that are not quite true. We would like to inform you about these puzzling offers in this article.

The home-ownership project is a one-off affair for almost all ordinary gas users. You could even call the house building or purchase as her life's work. They invest almost all of their belongings to turn that dream into a reality. The problem: Almost all future property owners need external help to make their dream come true. Of course, this refers to mortgage lending.

Of course, the provider always wants to profit from financial products. Consumers therefore need to be aware that there is a salesperson sitting on the opposite side of the negotiating table. His interest lies in his commission or margin, not necessarily for the benefit of the customer.

The Germans are currently paying for mortgage lending

The current Dr. Klein trend indicator mortgage lending (DTB) gives an insight into the current mortgage lending the German population. Among other things, it illustrates that demand for forward loans remains high in July 2015. The reason is simple: despite a slight increase at the time of the absolute low interest rates, home loan interest rates remain at a low level. Real estate buyers fear that new interest rate hikes could follow in the coming months. With a forward loan, they hedge against such a scenario.

The following table shows what Germans are currently paying for their standard rate and what the value of their mortgage lending is.

July 2014 April 2015 May 2015 June 2015 July 2015
Standard Rate [1] 545 € 439 € 460 € 494 € 501 €
Redemption rate 2.42% 2.73% 2.81% 2.79% 2.75%
Loan amount 168 TEUR 180 TEUR 171 TEUR 169 TEUR 172 TEUR
Debit Interest Rate 11 years & 10 months 14 years & 2 months 13 years & 6 months 13 years & 1 month 12 years & 9 months
Mortgage history 78.39% 78.66% 77.54% 77.32% 76.92%

In May 2015, the standard rate exceeded 500 euros for the first time. Nonetheless, home buyers paid EUR 150,000 less for a loan of EUR 150,000 (2% repayment, 80% mortgage lending, 10 years borrowing) less than in May 2014. This represents a reduction of 8% over the previous year.

Lack of transparency is a problem of many offers

The current problem of many consumers is not the number of available offers for mortgage lending, but their lack of transparency and their sometimes complicated scope. In a report by n-tv, the news broadcaster informs on its website about a customer, who made two proposals for its single-family home for its financing. The first offer consisted of no less than seven components: The financing initially consisted of two loans. Each loan will later be replaced with a Riester home savings loan, a bank loan, an annuity loan and finally a normal building society savings contract. There is also a KfW loan in the financial mix.

If the sheer number of financial solutions were not already confusing enough, there are computational problems with the individual components. In this case, the KfW loan was fixed for ten years at an interest rate of 0.75 percent. From the 11th year (of a total of 20 years), the provider has charged the same interest rate. Of course, this is very optimistic because no one can say today that the historically low interest rate will be at the same level in ten years' time. The chance for this scenario is rather low.

Solution: Financing processes up to the last Euro

In order to ensure fair conditions for its mortgage lending as a consumer, one must first deal with the market itself. The following articles by us offer assistance:

  • The 10 golden rules of mortgage lending
  • Mortgage lending: The biggest mistakes - part 1 & part 2

After collecting the information, the search for suitable mortgage lending begins. Before you can make an offer to the house bank or other banks, consumers should first search the Internet. Only in this way consumers can actually compare the offers and their conditions.

For the search for mortgage lending on the Internet, you can find a free mortgage lender on RechnerBaufinanzierung.de. With the construction financing calculator, consumers can calculate an individual mortgage loan free of charge and without obligation and claim the offers from more than 100 banks at the same time.

In the following practical example (data selected according to the values ​​of the DTB for the month of July 2015):

  • Net loan: 172,000 Euro
  • Credit period: 15 years
  • Mortgage lending: 80%
  • Amortization: 2%
  • Postal code: 50667

The top three results:

Effect. Annual Interest Debit Linked Monthly Rate Remaining Debt Total
2.12% 2.10% 590.53 € 111.314,72 € 217,100 , 65 €
2,15% 2,13% 595,25 € 111.157.91 € 217,713.72 €
2,19% 2, 17% 600.57 110,980.45 € 218,535.22 €

For all three offers, a residual debt of around 111,000 euros remains of the requested amount of 172,000. Consumers must finance the remaining amount with additional loans. In addition, various products are eligible:

  • Bauspar contract
  • Forward loans

Furthermore, consumers should check whether they can take advantage of any funding from KfW, their municipality or the state. Any small measure can reduce the financial burden.

Summary

Many home finance offers ignore the evolution of the interest rate. This leads to a wrong calculation of the actual costs to finance the construction project. This lack of transparency presupposes that clients have to look more closely and have better information.

Artikelbild: © spectrumblue / Shutterstock


  1. 150 TEUR, 2% repayment, 80% loan, 10 years debit interest

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