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Property financing - how many years fixed interest?For many people, buying their own property is not just a long-cherished dream, but also a decision for the entire life.
After all, the property should serve as building land for the much desired home.
But already with the property financing some points should be considered.
Fixed interest - ten, fifteen years or not at all?
In particular, interest rate fixation plays an important role in property financing. It provides the borrower with planning security that should not be underestimated. Although there are also real estate financings that completely dispense with a fixed interest rate, these are hardly calculable. The current interest rates can then be adjusted to market developments at any time.
Although this has the advantage that falling interest rates lead to a lower rate, or to a higher eradication, but vice versa, this can bring disadvantages with rising interest rates.
The fixed interest rate for a traditional construction loan is ten years. It therefore offers a certain degree of planning security for a comparatively long period of time. However, there are also offers that provide a fixed interest rate of 15 years and these are historical in the times
Not to despise low interest rates.
Planning security and high eradication
Borrowers of a property financing with 15 years fixed interest benefit several times. On the one hand, you can count on a fixed monthly installment for five years longer than usual, giving you five years longer to pay off your debts.
On the other hand, they have the right to terminate the loan after ten years, provided the interest rates are even lower than when the property loan was taken out.
On the other hand, there is a small interest premium that has to be paid for the 15-year fixed interest rate. This is currently around 0.2 percentage points. He amortizes itself by the longer planning security, however, clearly. Another advantage of the currently low interest rates: The eradication can be increased up to two percentage points, so the land is paid earlier.
Overall, in times of low interest rates, consumers should therefore opt for the longest possible fixed interest rate in order to benefit from the favorable conditions in the long term. Nevertheless, a comprehensive comparison is certainly worthwhile, especially in the case of real estate financing, which already represents a certain order of magnitude. Because even tiny interest rate differences are calculated over time and on the sum, clearly noticeable.