Financing a property in 5 steps

The central aspects of your property.

Whether it’s personal or business, getting a loan is usually a long-term endeavor that requires careful planning and financial responsibility. It is therefore advisable to keep a few important points in mind. In particular, an expert should accompany the comparison between different offers and conditions, since the differences are not always apparent at first glance.

Optimally finance your property in 5 steps

1. Optimal advice right from the start

High-quality advice is a long-term process that begins before real estate financing begins. Before you start looking for your dream property, you should clarify the financial framework with an expert. The amount of financing and the most sensible combination options are always individual and dependent on personal circumstances.

There is a risk of taking an unsuitable path under the influence of various comparison portals. Although it seems that by using different providers it is quick and easy to compare and find the best deal, experience shows that in practice it is difficult. One of our consultants will point out various options in a personal conversation and enable a comparison of specific offers that are tailored to you.

2. A comparison of the most significant criteria

There are many aspects to consider when financing a property, such as interest, fixed interest rates, regular repayments and the possibility of unscheduled repayments. Since your personal situation may change in the future, it is important to deal with different scenarios.

In order to carry out a realistic comparison, our consultants ensure that only comparable offers are considered. A pure comparison of interest rates with different special repayment options, for example, is not meaningful. Our consultants will work with you to work out the best offers for different scenarios, tailored to your unique needs.

3. Notice more costs

A thorough selection of the real estate loan is all the more important because in addition to the costs of the property, there may also be costs for the loan that are not obvious at first glance.

When financing or building a property, in addition to the actual purchase or construction costs, there are also ancillary costs, such as fees for the building permit, notary, insurance and brokerage fees and the real estate transfer tax. While these costs can vary, you should budget for a percentage of the purchase cost, which in most cases is between 8 percent and 16 percent, depending on the state.

Hidden costs, such as the so-called commitment interest, can also lurk in the financing. From bank approval of the loan to disbursement, it can take several weeks to months in some cases due to unexpected delays in buying or building a property. There can be big differences as to when the commitment interest to be paid is due and how high it is.

4. The right amount of equity

The equity you contribute not only affects the amount of your home loan, but also has a significant impact on the interest rate.

Although it is now possible in many cases to finance without equity, the so-called interest surcharge is then significantly higher than if you were to finance only 75% of the purchase price, for example. As a rule of thumb, the interest premium increases significantly from a financing share of 80% and more. Often a small change in equity can result in a large change in the interest rate. This can save you considerable interest costs over many years.

5. Check funding

There are government support options that can help you with the purchase of a property. For example, a KfW real estate loan could be part of your financing. The state subsidy often offers very good interest rates and enables you to agree on a repayment-free phase at the beginning. If you are planning energetic measures or have already implemented them, you could even benefit from additional funding.

As part of our consultation, we check whether this or another type of support makes sense for you.

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Proper API is an independent adviser in tax optimisation, insurance, investment and real estate. Proper API connects all these topics in holistic strategies to achieve financial goals. We offer you more than 10 years of experience and success.