Do I necessarily need equity capital when buying a property – and if so, how much?
When it comes to equity capital, there is a lot of uncertainty among prospective buyers. Basically, a high equity ratio reduces the required loan amount and also brings you better loan conditions in the form of lower interest rates. The general recommendation is that 20 to 30 percent of the purchase price should be raised from your own funds – but it should be at least 10 percent. If your equity share is lower, you often have to accept a higher interest burden. The same applies if you have no equity at all. In this case, the banks require higher collateral – for example, in the form of a very high and stable income. Many banks only grant loans if you have equity capital. If you already own property or are an investor, the calculation often looks different and financing up to 100 % of the total amount is possible. Our profitability calculation will tell you whether and how a property pays off for you.
Can I also cover the ancillary purchase costs with a loan?
When looking for a property, buyers often only consider the purchase price and forget that there are also considerable ancillary purchase costs. The ancillary purchase costs are made up of:
- Land transfer tax
- Notary fees
- the land registry fee
- the estate agent’s fees
In North Rhine-Westphalia, the land transfer tax alone amounts to 6.5 percent of the purchase price – so together with the other items, costs of around 10 percent are incurred in addition to the purchase price. You should be able to pay these additional purchase costs from your own funds, especially as only very few banks offer full financing that also covers the additional costs. For our Mallorca properties, please visit our FAQs, where we have summarised the most important points for you.
How does home4you support me in financing my dream property?
When you buy a property with the support of home4you, you benefit from our extensive partner network, which includes a large number of financial service providers from the region. We will be happy to take a close look at your economic situation and direct you to a suitable credit institution or bank. We are often able to offer our clients special conditions. First of all, get an offer from your local bank and compare. This home4you service is free of charge for you.
Any questions? Let us advise you individually!
Would you like more information on the topic of financing brokerage? Then the team of experts at home4you will be happy to take time for you. Call us at our Cologne real estate office, send us your message via e-mail or use the contact form provided!