Due to the low interest rate phase, which is still ongoing, fewer and fewer German citizens have signed a building savings contract in recent years. Experts now expect a slow increase in interest rates : Construction loan will also pay off again in the future. Construction loan contracts can therefore be a good addition to the financing of the long-awaited home. Since there are different options for this combination of investment and credit, a conscientious comparison is essential.
Differences of available Construction loan contracts
In the case of a Construction loan contract, both the savings and loan interest and the closing fee and the maximum Baussum sum must be considered. There are also significant differences with regard to the minimum savings period and the minimum construction sum as well as the possibility of making special repayments. Basically, each Construction loan contract includes three phases: Ansparphase, allotment phase and loan phase. The minimum term for building society savings, which is normally fixed at the time of the conclusion of the contract, is the saving phase. In this context, a fixed savings rate is to be paid monthly into the investment account. The allocation phase begins as soon as the homeowner usually has paid between 40 and 50 percent of the home savings. In order to guarantee the correct sequence of loan disbursements, building societies use the so-called valuation number. The loan phase begins with the decision to use the savings part and the associated loan. In the following period, the building society customer has to repay the loan in addition to mortgage rates in monthly installments.
The current interest rates almost demand to build a house or to acquire a condominium : Since 2008, there has been a downward trend in interest rates related to mortgage lending. In June 2013, the average interest rates were 2.0 percent, and since March 2016, they are again and again below 1.5 percent. Decisive for the development of construction interest rates are primarily the key interest rate that the EB (European Bank) stipulates and the development of mortgage Pfandbriefe. The latter is published monthly by the Association of German Pfandbrief Banks.
Current mortgage rates
Also for the acceptance of a mortgage loan is that a record-breaking low is observed. The most important factor responsible for the development of mortgage rates is also the EB’s key interest rate. The current mortgage rates are about 1.55 percent for a ten-year fixed interest period and about 1.15 percent for a five-year fixed interest period. In both cases, a lending outflow of 80 percent is assumed. The most advantageous are the interest, if a maximum of 60 percent of the purchase price in the form of a construction loan are needed.
Construction loan contract as a supplement to a loan
Not least depending on the total cost of the property, it makes sense to combine a Construction loan and a loan agreement. In order to find out which combination is the right one in a particular case, it is important to compare offers with advantageous terms in detail. Unfortunately, it is not possible to predict how long the conditions for homeowners will be as low as they are at present.