When it comes to calculating the cost of your own four walls, there’s one discipline that people like to practice, but all the experts warn against it: the extravagant calculation. The main reason for these lax calculations is that most contemporaries do not keep strict accountsn.
Accurate record keeping
So homework number 1 would be to create a budget book and meticulously note down how much money is spent for which purpose. This bookkeeping should be maintained over several months, preferably over a year, so that special expenses such as vacations, insurance, etc. can be deducted. are reliably recorded.
Homework number 2 consists of determining all incomes. As a rule, this is the current income from work, although employees and civil servants have an easier time here than self-employed people with fluctuating income. In addition to professional income, there may be income from rentals, part-time jobs, or the like.
The average sum of all income minus the average sum of all expenses then gives the financial margin. Depending on the amount of equity saved and the interest rate and repayment for Mortgage loan can be determined then the highest possible credit rate.
This is too much math for you? Then you can use rules of thumb, but these are only approximations. If you can handle a cold rent of 800 euros, you should be able to find that amount for a loan as well. But be careful: As a rule, the operating costs for a single-family house are higher than the ancillary costs for an apartment. 250 euros can quickly become 400 euros!
Guideline net income
Another rule is that the amount of the loan installment should not exceed 40 percent of net income. For example, with 2500 euros net, this would be 1000 euros.
Guideline cost of living
"A good corrective is the cost of living," adds Michiel Goris, CEO of the loan broker Interhyp. Here, around 40 percent of the household income should be estimated. According to Goris, this is about at least 600 to 800 euros for the first person and 150 to 200 euros for each additional person. "This means that if you live in a household with four people on a net household income of 2000 euros, you can not raise 1000 euros of this each month for the loan installment."
Long terms and high repayment
So as always it comes down to. How much the home may cost depends mainly on the interest rate and the amount of repayment, but also on the equity capital. It would be nonsensical to use a credit over a short period of time, e.g.B. five years, to conclude and with 1,0 per cent to redeem. While the monthly payment would be fabulously low, the remaining debt after five years would be insanely high. And who knows how interest rates will have developed by then??! If the remaining debt then has to be extended at high interest rates, the builder may no longer be able to service the loan. Then distress sale or foreclosure is imminent.
Experts recommend the longest possible terms and the highest possible repayment due to favorable interest rates. Our table is basically based on 15 years. That costs indeed approx. 0.7 percentage points more than a ten-year loan, but in return the builder can sleep much longer peacefully. And given the favorable interest rates, there’s still room to make reasonable repayments to push down the remaining debt.
Huge interest rate differences
In any case it is worthwhile itself the conditions of the offerers exactly to compare. This is emphasized by Max Herbst, owner FMH Finanzberatung, who has put dozens of credit institutions under the microscope. "For example, the interest rate difference for a 15-year loan with a loan amount of 150000 euros, 80 percent loan-to-value and two percent repayment between the first- and last-placed provider (65th place) in our mortgage comparison is one percentage point. In hard currency, this equates to a difference of 122 euros a month." That’s not all. "Over 15 years, the customer at the bank with the red lantern thus pays 22391 euros more than at the top provider, if the interest savings are invested in increased repayment."
Or calculated differently: With the interest savings, the scope for the loan amount expands, and the house can be better equipped, or it is enough for a few square meters more living space.