Real estate loan comparison – as of February 2020

The real estate loan is also known as a mortgage loan and is a cheap loan to finance dreams such as a property, house or condominium. It is the classic loan for house building and, in addition to the building loan, the form of financing to realize your own 4 walls. The real estate loan calculator here is a combination offer with icon direct. You can use the calculator and solicitation tool to finance the following options

  • condominium
  • detached house
  • Apartment house
  • Property
  • Debt restructuring of your existing property

Enter on the calculator how high the purchase price or value of the property is, what additional costs you expect (thumbs x pi this is usually 10% for brokers, taxes, contract fees, …) and how high is your own funds. At the end of the form, you also indicate the period in which you would like to repay your real estate loan and whether you also plan to have repayment-free years (maternity leave, trip around the world, unemployment, …).

If you read various offers and their websites, the following picture appears for real estate loans in 2019.

Current interest on home loans – at best

Current interest on home loans - at best

  • from 0.875% surcharge on the 3-month Euribor in the variable range (if negative Euribor value is not passed on, otherwise even an interest rate lower is possible)
  • fixed interest rate
    • from around 1.5% to 1.75% fixed interest for 10 years
    • from around 1.75% to 2.00% fixed interest for 15 years
    • from around 2.125% to 2.375% fixed interest for 20 years
    • After the fixed phase, a connection interest rate of 1% and more can be expected linked to the 3-month Euribor.

Banks only offer these services if their creditworthiness is rated as very good. Any lower credit rating results in a higher loan interest. Do you have other experiences with your real estate loan offers? Please use the comment area!

Infina is an independent consultancy and the residential finance expert for real estate finance. Infina has locations throughout Austria and more than 20 years of experience in the credit business. For those interested, Infina consultants can use products from over 100 banks.

The advantages of Infina:

  • over 90 times on site
  • Customers benefit from the size of Infina on the market
  • The aim is to find the right financing for every customer.

The company was founded in 2001. With almost 1 billion USD of successfully brokered financing in 2019, Infina is the market leader in Austria in the free provision of private real estate financing.

How much own funds do I need?

How much own funds do I need?

There is no generally applicable answer here, because the banks themselves have different requirements and also take individual circumstances into account. A rough guideline is a lower limit of 20% or 30%. It hardly makes sense below that. For example, in the magazine “ Profit 2/2018 ” various banks were asked how high their own funds should be and Bank Austria stated 30%, while GAWBA stated 10 to 20% of the financing amount and even less if the affordability was shown can. It sounds very tempting to get a real estate loan with little own funds, but the bank doesn’t give you anything and the higher the loan amount, the longer you pay back, or the higher the monthly installments.

If the own funds are too low, it can make sense or the bank will like it if there is a co-borrower. Banks like to think of parents, but be careful, as a co-borrower you are right in the middle of a loan!

What is the maximum term of a real estate loan?

What is the maximum term of a real estate loan?

Until recently, the maximum term of a real estate loan was usually still 30 years. Now there are longer runtimes. Some banks, but also building societies, allow a term of up to 35 years and in exceptional cases even 40 years are possible. What are 5 or 10 years more in terms of term for a property? But that’s a lot. First of all, note the age at which you are considering buying a property and thus a loan. This is usually the phase of life between 30 and 40 years. With a 30-year term, you are at the very end of your professional career. What about a job then? The rest is created by the compound interest effect, which makes the loan massively more expensive. A small calculation example.

  • Loan amount: 200,000 USD
  • ø Interest rate over the entire term: 3% nominal

How high are the interest payments then?

  • Term over 20 years: ~ 120,000 USD
  • Term over 25 years: ~ 150,000 USD
  • Term over 30 years: ~ 180,000 USD
  • Term over 35 years: ~ 210,000 USD
  • Term over 40 years: ~ 240,000 USD

You see, with every 5 years more term – the loan amount of 200,000 USD remains the same, the burden of interest increases with an interest rate of 3% by a further 30,000 USD.

Current status of real estate loans

Current status of real estate loans

However, the National Bank has now brought developments to the fore, which in turn is concerned and is passing this concern on to the banks. The advice of the bank is not to take too big risks from the bank’s point of view. B. higher own funds are required or the interest rate is higher because a higher risk is priced in here. As can be seen in the article on Standard, housing loans in Austria and prices have been increasing since 2010 – the bottom line is that prices have increased by 50% and that’s a lot! As a borrower, you should make sure that you take out a fixed-interest loan, because in the event that loan interest rates rise again, there could be a bad awakening. With a fixed interest rate over the longest possible term, you are on the safe side that there will be no surprises when interest rates change.

Mortgage loan from August 2016 

Mortgage loan from August 2016 at 7 Viennese banks

In 2016, AK Wien carried out an investigation into the cost of mortgage loans from Viennese banks. The initial situation was the need for USD 200,000 mortgage loan with a term of 25 years. The bottom line of the comparison with these 7 Viennese banks showed that there is a lot inside and it is important that the effective loan interest rates are compared with each other, because there are a few positions where you can and should negotiate so that the bottom line is that the lowest effective loan interest rates arise ,

Here are the results of the loan comparison:

Sufficient creditworthiness:

  • variable debit interest rates from 1.375 to 2.125%
  • Processing fee at 1 to 2%
  • Account maintenance fee per quarter between 6.76 and 20 USD (results in a difference of 1,324 USD over 25 years)
  • One-off costs such as B. Real estate appraisal costs

Best credit rating:

  • variable debit interest from 1.125 to 1.500%
  • Processing fee at 1 to 2%
  • Account maintenance fee per quarter between 6.76 and 20 USD (results in a difference of 1,324 USD over 25 years)
  • One-off costs such as B. Real estate appraisal costs

Result of the AK investigation:

The cost differences between the different banks amounted to an impressive 20,000 USD in the study in 2016 with a loan amount of 200,000 USD ! The banks have adjusted the conditions to a wide variety of parameters in order to make them more difficult to compare. The effective interest rate and the total costs, however, transparently inform which loan is the most expensive in the end.

Foreign currency loan for real estate

Foreign currency loan for real estate

What still often happened in the 90s and 00s is now no longer available or can only be obtained under certain conditions, a foreign currency loan! Due to the low interest rates on the Swiss franc or yen, many home builders have obtained a foreign currency loan and at the latest with the financial crisis there was a bad awakening. It was particularly bad for those who have or had a final foreign currency loan and fund insurance as a repayment vehicle.

The exchange rate to the USD was contrary to expectations and the repayment vehicle did not develop as hoped. In the past 10 years, many banks have therefore asked for additional collateral, borrowers to keep repaying the FW loan and other measures to minimize the credit risk. The financial market regulator has asked banks to reduce existing foreign currency loans and to no longer grant new foreign currency loans. If you still want to have a foreign currency loan as a private person today, you will have a hard time or have to meet numerous requirements so that it actually works.

The constitution of your loan file.

As soon as an offer to purchase has been signed, your advisor will then send you by email the list of documents required to compile your loan file.

The first step of your investment project is the loan simulation

The first step of your investment project is the loan simulation

It is at this point that your advisor will take special care to explain all the components of a loan to you, not only being limited to the interest rate but also to all the other additional conditions (insurance rate, prepayment penalties, etc.).

After the constitution, the file verification stage

After the constitution, the file verification stage

Once the simulation and the financing plan have been validated, your advisor will then check that your paper file is complete to send it to the banks.

It will therefore put several partner banks into competition, negotiate and defend your real estate project in order to obtain the best financing offer on the market.

The simulation of the loan before the constitution of the file

The simulation of the loan before the constitution of the file

Upstream of all these steps, you can also get a quick idea of ​​the calculation of your home loan. You just have to make a loan simulation, which you will find on many websites but in particular on the Lite Lender website. 

A simulation which will only take you two minutes and will allow you to have an approximate idea of ​​the monthly payments to be reimbursed. You just need to enter:

  • The overall amount you wish to borrow
  • The interest rate selected via an updated proposal of the rates currently offered on the market
  • The loan period you want (15, 20, 25 years, etc.)

However, this simulator does not allow you to check the real feasibility of your project and will only give you an approximate idea. Following this simulation, it is therefore essential to contact your mortgage broker to refine your search and obtain a precise result.

You will understand, you cannot do your mortgage calculation alone without having a real knowledge and expertise of the needs. Do not hesitate to turn to a professional and let yourself be supported throughout this process!

TO REMEMBER !

  1. First of all you must make a loan simulation of your project
  2. Have your project checked by a broker
  3. As soon as your project is financable, have your loan file assembled by a broker