Many of the 50+ generation regret having lived in rented accommodation all their lives and never having bought a home of their own. Accordingly, the temptation to buy real estate is now great: mortgage interest rates are extremely attractive, and in most cases you can also look forward to handsome savings.
So it is indeed worth considering owning a home as a form of retirement provision, even in old age. One day the home will be paid off, and you will be living almost for free. And as we know, rents are rising faster than pensions are being increased.
Of course, when buying real estate, paying off the installments can't be left completely out of the equation. Whether these are manageable should be carefully calculated beforehand. The problem is primarily that the return is measured lower than the previous income and then there are simply no longer such good financial opportunities. You would have to cut back very significantly financially, which is easier said than done.
To ensure that the project of owning a home as a retirement provision is successful, there are a few things to consider.
Check savings – take out a loan
First of all, there is the actual borrowing. You should not overdo it. It is advisable to use all of one's savings except for a small reserve for emergencies, and then borrow an amount that is manageable. By manageable, we mean that it can be repaid by the time you reach retirement age. With immobilienscout24.De find properties that fit well into the budget.
Higher repayment reduces and shortens remaining debt
In addition, amortization is highly significant. Efforts should be made to redeem as much and as quickly as possible. An initial repayment of one percent, which is required by the banks, is not sufficient.
Prospective retirees repay at a much higher rate so that they can noticeably reduce the remaining debt within a few years.
If income is low, reduce repayment rate
If it's clear that you won't be able to pay it off in full by the time you retire, it doesn't mean that you'll lose your retirement savings. This is where it makes sense to make real estate financing particularly flexible. It is best if the repayment rate can be adjusted after retirement has taken place. Repayments are being reduced so as not to restrict disposable income too much. However, the majority of the remaining debt should have been paid off by now.