For homeowners who live in their own property, the annuity loan is the most used form of financing. The advantages are obvious: The monthly installments (annuities), which consist of interest and repayments, remain the same in the agreed period (fixed interest rate) of ten or more years. This also applies if building interest rates should rise. This provides planning security for the borrower over the entire period of fixed interest rates.
An annuity loan is usually linked to the pledging of a mortgage. With follow-up financing (debt rescheduling), this can be overwritten more cheaply than a mortgage. The mortgage does not decrease continuously like a mortgage, but is only deleted 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 amortization percentages. Then you divide this by 100. This results in the annual charge for the annuity loan.
Annuity loan and the amount of construction interest
The building rates were the specter of the eighties. At that time, building rates were more than twice as high. Nowadays, however, a long-term annuity loan is recommended. Of course, the banks let the fixed interest rate be paid. The longer the building rate is to be contractually stipulated, the higher the fees. Interest. In the past, fixed interest rates of ten or fifteen years were common. Today, banks even offer fixed interest rates of up to 25 years. The building rates do not remain the same over the entire term of the loan.
The interest rate differences between a 5-year annuity loan and a 25-year annuity loan are around 1.5 to 2 percent. Consequently, one and a half percent can exclude an interest rate risk for the entire term of their construction loan. If the annuity loan has not yet been repaid after the expiry, you should secure cheap follow-up financing for the remaining amount.
Annuity loan and the amount of the repayment
The burden of an annuity loan is crucially related to the amount of repayment you have chosen. This is the amount that is actually deducted from the loan amount so that the annuity loan decreases month by month. Over time, the interest portion of the rate decreases, while the repayment portion increases continuously as the interest saved. The principle applies to an annuity loan: “The lower the repayment rate, the longer the loan term. The repayment amount of the annuity loan can be freely selected. However, this must be at least 1%. In this case, it would take about 30 years for the annuity loan to be fully repaid. A two percent repayment is worth considering at low building rates. This shortens the term by around ten years.After ten years, only 15 percent would have been paid back.
More valuable tips on annuity loans
Despite all the advantages that an annuity loan brings, it should be without appropriate professional security and without an equity component of min. 20 percent of the financing of a property can be waived. Because anyone who can no longer serve their monthly installment at any time is at risk of being foreclosed. In addition to detailed advice from several banks, you should consider the following points for an annuity loan before closing. The granting of the right to make annual special repayments, otherwise prepayment penalties have to be paid.
In addition, caution is advised with a financing combination of a pre-financing loan and a building loan contract. A home loan can also be more expensive than a classic annuity loan due to the low construction interest.