In the internet and other media, the financing of real estate without equity (full financing) is often described as dubious. Anyone who cannot contribute at least 20 percent of his own capital should therefore keep his hands off his own real estate or property. Let a financing. But is this really correct and still in line with the times?
When you read some articles by "specialist journalists", you quickly ask yourself as a professional from the field where and how these "specialist journalists" have actually done their research. Again and again it is written that banks in germany generally do not offer full financing or that this is even forbidden by law. It is also often claimed that real estate financing is only possible with at least 20 percent equity capital. Who this 20 percent equity plus. Anyone who does not bring along ancillary acquisition costs has no chance with the banks in this country. And all offers to finance real estate even with low equity investment (or even without any) are therefore fundamentally dubious and anti-consumer.
It's clear that consumers are quite unsure about this. And that is also good! Why? If you are not sure, you ask and question more, inform yourself more and think more about your actions. Even if the o.G. If these claims are wrong, i would still like to thank the journalists.
Times are changing.
Until the 1990s, private residential real estate in germany was financed primarily by mortgage banks and building societies. The legal requirements allowed them to finance a maximum of 80 percent of the value of the property (insurance companies a maximum of 60 percent). The frequently cited "20 percent rule" dates back to these times. However, even in these times, there were already many ways of "creatively – and only on paper – presenting the required equity capital".
But since the 90s, a lot has happened and changed. The circle of real estate financiers has grown significantly. In the meantime, real estate is mainly financed by "full banks". These are all the commercial banks, cooperative banks or savings banks that maintain checking accounts and operate local branches (or, like ING-diba, can only be found on the internet). And in the meantime, mortgage banks, building societies and even insurance companies have found ways and means to cover legal requirements for the security of financing in such a way that even higher loans are possible. Anyone who claims today that you absolutely need at least 20 percent equity capital to finance a property is no longer up to date.
Full financing is anything but dubious!
Today it is no longer a problem to finance a property completely without equity capital. Even the so-called. "Soft costs" for new construction or purchase can be co-financed under certain conditions. Such high loans are neither forbidden by law nor unusual. And in the meantime, even the consumer associations have realized that full financing is neither a devil's bargain nor dubious.
However, it all depends on the details!
However, consumer groups warn, and rightly so, that financing with little or no equity carries some special risks. The main risk here is possible overindebtedness. Over-indebtedness is when existing liabilities are greater than existing assets (incl. Your own property) AND all installment obligations consume more than 40 percent of your net income. Anyone who scratches at this load limit or even exceeds it should really think twice about buying real estate or, if necessary, cancel the whole thing. Take a more modest approach.
At most, the advisor(s) are unserious!
Full financing is a very consulting-intensive matter and demands a great deal of the consultant or advisor. The advisor a very high level of responsibility. When in doubt, consumers need to be advised against building or buying rather than buying. Unfortunately, there are many "customer advisors" at banks or brokers who have less the interests of their customers in mind, but mainly their own. Who as a consumer to such an advisor or. Advisor gets, definitely runs the risk of getting into devil's kitchen with the financing project.