Disadvantage is a serious one for the private individual
Unfortunately, when taking out a loan, many consumers tend to only look at the monthly interest payments and neglect the repayment. For many years, entire properties were financed without repayment. The loan amount thus remains constant until the loan expires. Only then must the entire amount be paid back. This sounds tempting to the consumer, as it shifts a large part of the payment far into the future. Since he always has the property as collateral for a mortgage loan, the banks are generous and offer the customer loans without repayment. The disadvantage is a serious one for the private individual. He wrongly feels certain that he will be able to finance the amount at a later date. He is rarely so disciplined and saves a regular sum for the date of the repayment in addition to the monthly interest payment.
It is not without reason that there are two dates for homeowners where it becomes critical: first when the tax subsidy expires and second when the loan repayment is due. Most of the home sales and auctions take place on these dates and in the event of a divorce. The most frequently chosen financing method for building a house or buying a property is the annuity loan or repayment loan. In addition to the interest payment, a certain amount is repaid right from the start. This sum amounts to a certain percentage of the total loan.
Make up the sum to be paid annually
Interest and repayment rate together make up the sum to be paid annually, i.e. the annuity. This sum remains constant over the term. This means that the loan amount to be paid falls from month to month. At the same time, the amount of the repayment increases. The higher the repayment, the faster the loan is repaid. That sounds tempting and so many builders put too much effort into it at the beginning. They calculate very tightly and are then quickly faced with the decision to sell the property in an emergency. After only two unpaid installments, the banks are exercising their right to exercise access to the property. They come first in the land register and therefore have all rights. Even a sale is then no longer possible. You should therefore calculate a little too generously when calculating the interest rate and the repayment.
Prefer to schedule special repayments
Otherwise, divorce or job loss will inevitably lead to an existential problem. Be sure to find a lender that enables special repayments. But inquire about the conditions. A special loan repayment is only possible up to a certain percentage. The banks often also charge prepayment fees to a considerable extent. Calculate different situations in detail before you finally decide on a loan option. Finally, they usually bind over several decades. Let your bank calculate a loan repayment schedule. You can see at any time when which amount is due and how high the interest portion and the repayment is.