Financing

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We’ll find the most favorable real estate financing for you

WE’RE HAPPY TO ADVISE YOU REGARDING THE PURCHASE OF YOUR REAL ESTATE

Have you already found your dream house, or are you thinking about building the right property for your family? In that case, we’ll be happy to help you in your search for favorable financing of your real estate. Use our no-obligation and free-of-charge consulting to find the best provider for a building loan. Our company, CITYHYP Bank- und Immobilienconsulting GmbH has already been active on the real estate market since 2001 and sells high-quality real estate in Potsdam and Berlin. Use the professional expertise of our owner-managed company and ascertain your own individual financial scope for a building loan with the help of our trained consultants. CITYHYP cooperates with over 300 credit providers to find the best offer for you. We provide consultation on financing, regardless of whether you purchase a house or apartment from CITYHYP. Our consultation service is absolutely free of charge for you. We determine the best conditions for a construction loan for you, quickly and reliably so that you can concentrate fully on the planning of your new building or the purchase of an existing property.

Independent consultation services

A detailed consultation is the first step at the start of our comprehensive consultation on the financing of your real estate. Together with you, we calculate your monthly income and expenditures in order to decide what installments correspond to your financial capabilities. As an additional step, we inform you of the term of the financing and the possibility of unscheduled repayments, which are offered with and without penalty interest. At the same time, your personal expert consultant will always keep track of your financial situation to guarantee that you can afford your real estate financing in every circumstance. We have a large network of various providers of building loans so that we can select the best offer for you, quickly and efficiently. And we also take into consideration the various support programs that the Federal Government of Germany offers via the Kreditanstalt für Wiederaufbau (KfW) bank. If you commission CITYHYP to find a suitable construction loan, we will take on negotiations with the credit providers and, also, the major part of the required formalities. You will receive a contract ready for your signature from us, with which you can get a building loan with no complications. Save time, nerves and costs by letting CITYHYP take over the tedious negotiations with banks and other providers. Benefit from our expert knowledge and free-of-charge consultation services.

Your real estate financing

Calculate how much you can spend for your dream home.

Equity 4.000.000 €
Monthly payment 9.171 €
Price 5.423.232 €
Funding requirement 2.200.923 €
Non-binding financing example status on 27.04.2024.
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Top Questions on Construction Financing

Quick answers to the most important questions on construction financing

Some buyers and homebuilders let themselves be guided by low construction interest rates and take out construction financing too quickly. However, the interest rate level should not be the most important argument when it comes to building or buying your own home. The interest rates can go up again and can cause the borrower to have to pay a much higher rate when taking out follow-up financing. Therefore, the focus of considerations should be the reason why the property is being built or purchased. Young families need more space in a rented apartment, and high-earning employees want to provide for old age. Through discussion with the consultants of CITYHY Bank- und Immobilienconsulting GmbH, interested buyers will learn the maximum monthly liability that they can bear and how high the maximum purchase price for their own home should be. In this respect, our expert consultants will also take into consideration the various subsidies available, that the Kreditanstalt für Wiederaufbau (KfW) offers for new constructions, renovations and refurbishments. Low-energy houses and energy-efficient buildings benefit from various interest rebates or redemption subsidies, which reduce monthly installments.

Don’t lose sight of ancillary expenses

In addition to the net purchase costs, property owners have to take into account various ancillary expenses that increase the expense of building or purchasing a property. The most significant ancillary expenses include:

  • Broker’s fee for the agent who acted as a broker for the estate or property
  • Real-estate transfer tax, which also applies when purchasing a condominium
  • Notary costs for registration of the purchasing contract and for deed registrations
  • Tariff rate for the registry of deeds
  • Costs for a valuation to ascertain the collateral value of the property and parcel of land

The decision to purchase a property is often made in relation to retirement age. Especially in large cities, rents keep rising further and often amount to up to a third of disposable income. At the same time, the state pension is being assigned an ever higher income tax rate. Those who retire in 2040 will have to pay income tax on their entire state pension. So for many homebuilders, having their own home represents providing for old age – with the assurance that housing will be affordable even in old age. In this respect, homeowners benefit from the fact that their apartment has been paid off for the most part and does not induce high costs anymore. The more rent and real estate prices rise in Germany, the greater the financial benefit of the home owner as opposed to the tenant. Only those who frequently move due to work or private reasons or who want to spend their twilight years with their children or in an establishment for senior citizens should carefully consider whether the purchase of real estate is worth it for them.

As soon as the fixed interest rate term for ongoing real estate financing runs out, borrowers should also get hold of information on the interest rates of other providers. The loan does not necessarily always have to be managed by the same bank up to finally being paid off. An interest rate that is half a percentage point lower already leads to either the monthly credit installment being reduced or the building loan being paid off quicker. Therefore, the homebuilder should get alternative offers and compare the various interest rates. Written offers from other banks also improve the negotiating position of borrowers with regard to their current bank. If, apart from this, the loan nearly coming to term has duly been paid back, the credit rating of the borrower increases. This also leads to a stronger position for negotiating a favorable interest rate.

Some banks offer full financing without any own capital for a building loan. However, in this case the borrower usually has to put up with a worse interest rate than with financing where there is own capital provided. The bank covers the higher risk that the loan may not be duly paid back, through the higher interest. In many cases, lenders will only engage in financing of more than 80% of the purchasing price if borrowers have an especially high and secure income or if they can provide other securities. With a normal construction loan, the financed real estate serves as security for the loan. Experts recommend 20-30% of own capital. The ancillary costs for construction should at least be covered by own capital.

Support through the KfW is applied for through the lending bank. Homebuilders have to apply through their own bank in order to either get a loan with an especially good interest rate or a subsidy. However, the lending institution stipulates several conditions for construction for the application to be authorized. For instance, a new building must be constructed to be energy-efficient or, alternatively, the homebuilder decides in favor of renewable energies, as the case may be; for instance, a photovoltaic system for electricity production. The KfW also supports age-appropriate conversion of an existing property or energy-efficient refurbishment. Some offers can be combined so that there is a double advantage for the applicant.

Through comprehensive consultation on the financing of your own home, all eventualities should be included so as to avoid later follow-up financing. If it does transpire during construction work that the borrower does still require a higher financing amount, the lending bank is the first contact partner. However, in this respect, the homebuilder has to anticipate a higher interest rate than with the original construction loan.

Homebuilder’s liability insurance is important

Every homebuilder is responsible for safeguarding the construction site. Even if this task is transferred to the site manager, the homebuilder is liable in the case of accidents due to insufficient signage or bad lighting. Future homeowners should not rely on their private liability insurance for this. This insurance does cover the homebuilder’s risk in the context of the house and landlord’s insurance. However, nearly all insurances limit the liability to a specific construction sum, which is normally insufficient for a new construction. For this reason, concluding a separate homebuilder’s liability insurance is recommended so as to be sufficiently protected with regard to accidents at the construction site.

Real-estate loans are offered with various terms. Most banks conclude the contracts with a minimum term of five years. The end of the fixed interest rate is also reached after ten, fifteen, twenty or twenty-five years. Some very few providers also accept real-estate financing with a term of thirty years. However, in this respect, borrowers should note that an early termination of the credit agreement is normally not possible or the bank will demand high charges for cancellation prior to the agreed term. This is irrespective of unscheduled repayments, if they have been agreed in the lending agreement. The applicable legislation only provides that a construction loan can be cancelled early, with a term of six months, without paying an easy withdrawal penalty, ten years after the entire construction sum has been paid out. In periods of low interest rates, experts advise a longer term for the construction financing, while when there are high interest rates, a short term is advisable. Three to six months before the end of the existing fixed interest rate term, the homebuilder should gather information on what various lenders are offering. Borrowers are not obliged to conclude follow-up financing with the same bank they have been with previously. Even if the bank sends an offer, this is not binding.

If construction interest rates are very low, borrowers can secure a favorable interest rate already one to three years before the end of the fixed interest rate term of their current construction financing. For this, they need to conclude a forward loan as an annuity loan. With an annuity loan, installments remain at the same amount throughout the entire term. The installment is made up of the interest component and the repayment. A forward loan is only paid out after the agreed lead time has expired. In agreeing the interest rate at an early state, the lender runs the risk of the interest rates possibly going up in the meanwhile. In order to hedge the possible loss through this, the lender requires a surcharge to the current interest rate. This surcharge usually consists of 0.01% to 0.05% per month. Despite the surcharge, for many borrowers, concluding a forward loan is worthwhile in phases where interest rates are low.

A building loan may also be used to modernize your own home or for a needs-based conversion. This includes conversion measures required to make the house or apartment senior-friendly or disability-friendly. Energy saving measures, such as installing new heating or highly insulated windows, can also be financed using a building loan. Many of these measures are supported by the KfW. If the financing requirement for the modernization planned is not too high, a classical installment credit or consumer credit could be alternatives to a building loan.
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Glossary

What you need to know

Important specialist terms regarding everything to do with purchasing real estate

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These steps are important for a construction loan

As soon as you consider purchasing or building an apartment or house, you should have a consultation with the experts at CITYHYP. You will learn from our well-trained consultants that it doesn’t come down to favorable opportunity when it comes to becoming the owner of your own home. Instead, your personal wishes and goals and the needs of your family should be at the focus of your considerations.

Homebuilders should place just as much value on optimal financing as on the property itself. There are many points to consider when choosing a building loan. The consultants at CITYHYP will provide you with comprehensive information on the various types of repayment, the possibility of securing an interest rate, the available subsidies, and the kind of financing with which you will get an installment that suits your financial circumstances exactly.

Make a no-obligation consultation appointment with us before deciding on a building loan. We are not a credit institution, and can therefore present you with a selection of different financing offers. In a consultation, we will inform you in detail about your personal situation and your goals and needs in terms of your dream property. After taking down your information, we will inquire with various providers and select the best financing option for you. This way, you can be sure that your needs are met and that you get the optimal building loan.

If you take advantage of our free-of-charge service, we will compare offers from several hundred providers for you. Very often, we find a financing option where the interest rate is significantly lower than that of your home bank. Our experts will be happy to check your bank’s or your savings bank’s offer. Use the high opportunities for saving through which you can achieve a lower installment or quicker repayment of your loan.

Building loan lenders decide on the granting of a loan on the basis of the documents submitted. Therefore, it’s very important to put all papers together in such a way that there are no errors or gaps. We provide you with a checklist in which all the requested documents are listed. Your personal consultant will be happy to support you with all questions so that you get your building loan in a quick and uncomplicated manner.

With the help of our consultants, you will find the optimal building loan, which will be quickly paid out to you. We will support you and accompany you at every step of the way regarding all your questions. Make use of our expert consulting and benefit from a comparison of providers, which will guarantee you the best real estate financing. Even after the building loan is paid out, you can confidently turn to your client consultant at CITYHYP with any questions or problems.
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Our offer also stands for buyers from abroad

Here’s what international prospective buyers have to take into account when purchasing

Have you found your dream house in Germany or would you like to invest in German real estate, but you live abroad? That’s no problem, as we also offer consultation to prospective buyers with a permanent address outside of Germany. In addition, we would be happy to procure you real estate financing through a German lender, if you have capital resources in the amount of 30-50% of the purchase sum.

Our consultants will discuss all the important points with you and answer your questions. If there are still issues which need clearing up, we will be happy to procure a lawyer specialized in the international sale of goods law regarding real estate. As the contracts will be certified by a notary, you can rely on the lawful processing of your property purchase.

If you decide to purchase an apartment or house in Berlin, you have to expect around 2% notary fees and 6% real estate transfer tax. Added to this are our fees, which are below the price of agents and other financial intermediaries. On the other hand, there are rental returns of 3 to 3.5% in the Berlin area, if you buy a new apartment.