For homeowners who occupy their property, the annuity loan is the most widely used form of financing. The advantages are obvious: the monthly installments (annuities), which consist of interest and repayment, remain the same for the agreed period (fixed interest rate) of ten or more years. This also applies if the construction interest rates should rise. This results in planning security for the borrower over the entire period of the fixed-interest period.
Usually an annuity loan is coupled to the pledge of a land charge. This can be signed over with a follow-up financing (rescheduling) admittedly more economically than a mortgage. The land charge does not continuously decrease as in the case of a mortgage, but is only cancelled after full repayment.
How to calculate an annuity loan?
An annuity loan is calculated by multiplying the loan amount by the sum of interest and repayment percentages. Afterwards one divides this then by 100. This results in the annual burden for the annuity loan.
Annuity loans and the level of construction interest rates
The construction interest rates were the spectre of the eighties. At that time, construction interest rates were more than twice as high. Nowadays, on the contrary, a long-term annuity loan is advisable. Of course, the banks let pay the fixed interest rate. The longer the construction interest rate is to be contractually fixed, the higher fees u. Interest. In the past, a fixed interest rate of ten or fifteen years was common. Today, banks even offer fixed-interest periods of up to 25 years. Here, the construction interest does not remain the same over the entire term of the loan.
The interest rate difference between a 5-year annuity loan and a 25-year annuity loan is approx. 1.5 to 2 percent. Consequently, you can eliminate interest rate risk for one and a half percent for the entire term of your construction loan. If the annuity loan is not yet repaid after expiration, one should secure a favorable follow-up financing for the remaining sum.
Annuity loan and the amount of repayment
The burden from an annuity loan depends crucially on the self-selected repayment amount. This refers to the sum that is actually deducted from the loan amount so that the annuity loan decreases month by month. Over time, the interest portion of the installment decreases, while the redemption portion continuously increases due to the interest saved. With an annuity loan applies the principle: "The lower the repayment rate, the longer the credit period. With an annuity loan, the repayment amount can be freely selected. However, this must be at least 1%. In this case, the time until the annuity loan is fully repaid is about 30 years. After ten years, however, only 15 percent of it would be paid back. Worth considering is with low building interest a two per cent repayment. This shortens the term by approx. ten years.
Further valuable tips on annuity loans
Despite all the advantages that an annuity loan brings with it, without appropriate professional security and without an equity ratio of min. 20 per cent on the financing of a real estate be renounced. Because who can serve its monthly rate at any time no longer, the foreclosure threatens. In addition to detailed consultation with several banks, you should consider the following points before taking out an annuity loan: The review and use of the " homeowner subsidy. The granting of the right of annual unscheduled repayments, as otherwise early repayment penalties are to be paid.
In addition, caution is advised with a financing combination of pre-financing loan and building savings contract. Likewise, a building society loan can be more expensive than a classic annuity loan due to the low construction interest rates.