Anyone who has created a home savings contract as part of a long-term consideration, usually wants to spend money on real estate at a later date. After a certain amount has been paid into a home savings contract for several years, the bank can pay out a building society loan to the saver. The money for real estate may be officially used only for residential purposes. In most cases, the saved amount for the acquisition of home ownership is not enough, so that a home savings loan must be taken. Different types of home savings loans are offered by the banks on the market, which are essentially different from the type of financing and its repayment method.
The classic financing
Anyone who thought that there was only one form of repayment of money for real estate was wrong. The best known loan is the installment finance. The money is repaid in equal amounts to the financial institution. The monthly installment consists of an interest and repayment portion. The term can be shortened if the monthly repayment rate is increased. On average, such funding is repaid after 30 years.
Financing through life or pension insurance
The purchase of a property may provide tax benefits. The life insurance can be given in the form of a financing to the bank. So you pay back during the term only the interest. End of the term of life insurance, this amount is used to pay off the remaining loan amount. With this form of financing one must note that the income from life insurance is no longer tax-free in full. Compared to the classic financing, the so-called repayment loan, the total cost is usually lower.
The annuity loan
A very unknown form of home loan is the annuity loan. Here, one pays constant amounts back to the bank, whereby the repayment and interest portion is significantly influenced by the degree of annuity. The degree of annuity depends on the duration of the fixed interest rate. As a result, the interest portion per installment decreases almost imperceptibly and the repayment portion increases. In order to have a good chance of saving on this loan, at least 1 percent of the total loan amount should be repaid in the first 12 months. At the end of the repayment term, the loan is fully repaid.