House financing traditionally consists of the components equity, Personal contribution and external financing. While the first two components can be determined relatively quickly by the limits of personal performance, there is the formerly classic one, Already calculated home financing up to the repayment of the last euro meanwhile in almost innumerable variants. Education makes sense here.
The long-term mortgage loan with its three variants is part of the classic construction financing: Annuitätendarlehen, Installment loan and repayment-free fixed loan with repayment in one sum at the end of the term. The differences are easy to spot: In the case of an annuity loan, the monthly installment to be paid remains the same during the term, However, due to falling interest rates, the composition of interest and repayment changes continuously in favor of repayment.
In the case of an installment loan, the repayment portion remains the same during the term, here the amount of the total installment falls due to the falling interest burden due to repayment. A fixed loan means, that in addition to the constant interest rate, a separate amount is included in a wealth creation concept (Life insurance, Securities funds) is to be paid, which is used to repay the loan on a certain date. These three loan variants are available with a wide variety of fixed interest rates up to fifteen and twenty years.
The financing models of our parents and grandparents have meanwhile been expanded to include swaps, Caps, Forward-Darlehen, Currency loans and / or a mix of all of the above. Some of it sounds more complicated than it is: Ultimately, a swap is nothing more than the good old long-term fixed interest rate, only that the underlying transaction is from the interest rate hedge (Swap) is separated. The cap is more innovative: Behind this name is an interest rate hedging instrument with the advantage, that the borrower benefit from the fluctuating interest rate for short-term loans and thereby set upper limits on the risk of interest rate changes (Cap) can. A forward loan includes a future interest rate hedge. Of course, all these instruments, like the classic fixed rate, have their price.
Currency loans are always up to date, when loans abroad are cheaper than at home. By borrowing in foreign currency, the borrower can benefit from cheaper foreign interest rates at the price of a currency risk: The loan becomes more expensive, when the domestic currency weakens. This risk can be countered by separately hedging the currency. At the same time, an interest rate hedge is also recommended for currency loans. Both hedges together, however, largely cancel out the advantage of the currency loan; without security it remains speculative.
The loans from funding programs, especially from KfW, make more sense. However, these can only ever be one component in the financing.
The construction financing is secured by a land charge on the property to be financed.