Who wants to get a loan, must first meet some requirements, for example, in terms of creditworthiness.
Most consumers have no problem getting a suitable loan disbursed by the bank. Nevertheless, the lender must adhere to certain conditions. As a result, loans are only granted under certain conditions. You can find out what these are in the following sections.
Overview of the requirements for obtaining a loan
First, we would like to give you a brief overview of what are generally the requirements to be met if you want to have a loan from your bank. A little the conditions are also dependent on the type of credit. Overall, they are nevertheless relatively uniform requirements, in particular:
- Sufficient to good credit rating
- No negative Schufa
- Regular income
- Dependent employment relationship outside the probationary period
- Collateral (optional)
- Equity capital (depending on the type of loan)
In the following, we would like to go into more detail about the individual requirements, so that you can personally assess whether you probably have a good chance of receiving a loan approval from the bank.
Creditworthiness: Creditworthiness as a basic requirement
There are two basic requirements that you must meet at any bank in order to receive a loan. One of these requirements is your creditworthiness. What does it mean? All natural persons who have full legal capacity are eligible for credit. The full legal capacity, in turn, you attain with completion of the 18. the age of majority, i.e. the beginning of the age of majority. Only very few people fall under the exceptions, which even from the 18. You do not have full legal capacity when you reach the age of 18. These include, for example, permanently mentally disabled people or people who are under guardianship.
The second basic requirement for the granting of credit is a sufficient creditworthiness, also known as credit rating. Whether you are creditworthy or not, the banks usually determine several factors. If you are already personally known to the bank, the employee has certainly already formed an impression of your personal appearance and your financial circumstances in the past. Then he can already well assess whether you have a sufficient credit rating. It is somewhat more difficult with new customers or under the condition that you claim the credit online at a previously unknown bank. Then, however, there are other characteristics on the basis of which the lenders determine a sufficient creditworthiness.
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Schufa information: negative entries as a knock-out criterion
Among other things, the data that are stored about you in the Schufa, among the other features by which the banks assess your creditworthiness. As you know, Schufa is a credit bureau that has stored several 100 million individual data records on more than 60 million inhabitants in Germany. In addition to purely personal data and neutral as well as positive characteristics, this includes in particular negative Schufa characteristics.
If such a feature appears in your Schufa query, the probability that you will receive a loan from the bank is only slight. This applies of course in particular to very high loan sums, as they are typical for a real estate loan. But what are actually negative Schufa characteristics?? Negative entries, which should preferably not be in your Schufa report, include in particular:
- Dunning notice
- Enforcement notice
- Affidavit
- Opening of private insolvency proceedings
- Arrest warrant
- Delinquent or. unsettled credits
All these characteristics indicate to the banks that you have been unable to meet your financial obligations at least once or even several times in the past. In this context, most lenders do not bother to check in each individual case how the negative entry came about. Sometimes there are actually major financial problems behind it, but sometimes it is more of a trifle. For example, if you have received a penalty notice for parking illegally and you were not prepared to pay the fine, this may have already resulted in the entry of a reminder notice in Schufa.
Tip: If you do not agree to obtain a Schufa report, most banks evaluate this in the same way as if there were a negative feature in the Schufa data. Therefore, it is recommended in any case, if you want to have a loan, that you give your consent to obtain the Schufa query.
Sufficient income must be available
Another mandatory requirement for obtaining a real estate loan and other loans is the existence of a regular income. Some lenders only require proof of income, which is possible, for example, on the basis of the following documents:
- Salary statement
- Employment contract
- Salary statements of the employer
- Salary entries on the bank statement
Other banks would like to have an income and expenditure statement in addition to the proof of income or. create these themselves. In this case, all fixed costs per month are listed in addition to the income. This is a good way for the bank to determine whether your income is sufficient to cover all expenses and the future loan installment. The result of the income and expenditure statement is also called freely disposable income. How high your income must ultimately be, about this there are no uniform statements on the part of the lenders. However, usually monthly net incomes between at least 1.500 and 2.000 Euro as sufficient.
Employment relationship: Dependent employment relationship often desired
The lenders are not only the income important, but in addition, there are now numerous banks that take a look at the type of income. For some lenders, it makes a difference whether you have income from a non-self-employed activity (dependent employment) or as a self-employed or self-employed person. Freelancers obtain. In particular, the latter two groups (freelancers and self-employed) are finding it increasingly difficult to obtain a loan from the bank. This is especially true for large-volume loans, as is common in the real estate financing sector. The bank prefers in the employment either civil servants or employees who are no longer within the probationary period and can show a permanent employment contract.
General requirement: residence and bank account in Germany
In addition to the previously mentioned requirements for the granting of credit, there are also some general conditions, which are also found in this way at almost every credit institution. This includes, among other things, that you have your main residence or habitual residence in Germany. Further a German bank account should exist, from which afterwards the agreed upon loan rates can be debited. Some banks do make exceptions to the aforementioned conditions, so it is sometimes just as possible that you are based abroad or do not have to keep your current account in Germany.
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Collateral as a prerequisite for higher loans
Another requirement for lending does not apply to all loan types and loan amounts, but it does apply to real estate loans. In this context, it is a question of collateral, which is required on the part of the bank, so that a positive credit decision can be made. Such loan collateral is certainly not necessary if you are granted an overdraft facility or an installment loan of, for example, 5.000 euros would like to take up. For larger loan amounts, usually far from the 20.000 euros, or in the case of real estate loans, however, banks rarely waive collateral for the loan. Basically, there are several collaterals that are accepted by the lenders:
- Guarantee
- Assignment of claims
- Pledge of savings
- Pledging of securities
- Collateral assignment motor vehicle
- Land charge resp. Mortgage
The surety bond is the only personal loan collateral and is relatively universal in its application. You only have to make sure that the guarantor has a good credit rating, otherwise he would not be accepted by the bank. A more special loan security is the Sicherungsubereignung, because this is used almost without exception when you take out a car loan. The pledging of securities or savings as well as the assignment of claims are relatively universally applicable.
A typical loan collateral used in the course of real estate financing is nowadays the land charge. In the past, banks tended to register mortgages in the land register, but this practice has changed significantly in the last ten years. Due to the greater flexibility and independence from debt, nowadays almost only land charges are accepted for real estate loans.
Equity in construction financing: increasingly a prerequisite
A last condition for the credit granting comes almost exclusively in the context of a construction financing, thus with the real estate credit, to the effect. This refers to the equity that you can include in the real estate financing. At this point we would like to mention this requirement only briefly, because in another article we draw attention in great detail to the importance of equity in the context of real estate financing. Basically, each credit institution handles it somewhat differently, whether the equity is a mandatory requirement for the granting of credit or one makes it dependent on the individual case, whether and how much equity should be available. In this regard, the banks can be divided into several groups, in particular:
- Equity capital is not mandatory
- Equity capital must necessarily be available
- Equity ratio of at least 15-20 percent
The vast majority of all banks nowadays no longer waive equity that the borrower can contribute. This means that you often have to have an equity ratio of at least 15 to 20 percent if the real estate loan is to be approved by the bank. By the way, not only credit balances or material assets are considered as equity capital, but also possible own contributions to the construction of a house can be taken into account.
Note: Equity has several advantages in construction financing. It makes the financing more stable, lowers the monthly loan installment and, in addition, you usually get a more favorable interest rate than offered without equity capital.
In summary, it can be stated that there are definitely some requirements that you must meet to obtain a loan. A particularly large number of conditions exist in the area of real estate financing. This is due to the fact that there are long terms and relatively high loan amounts involved, so the banks check your creditworthiness particularly closely.
Equity capital in construction financing
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