Lend a Good Idea for Your New Home – Credit – Borrow Money
Will you soon be selling your property and are you looking for a new home? Or do you want to buy a house for the first time? In both cases you need to look for a good mortgage loan. Unfortunately, the housing prices are rising again. How much money can you spend on a loan? What is sensible? In our opinion, it is wise not to look at how much money you can borrow.
However, it is more sensible to determine how much money you would like to have on a monthly basis for other things that are important in your life. Therefore, it is best not to borrow the maximum loan amount, so that you will not run into problems if certain circumstances change in your life.
The bank determines the loan amount
Ultimately, it is the bank that determines the loan amount. It is important to always request a loan offer from several banks. You can therefore compare the various interest rates and additional costs. A bank determines the maximum loan amount on the basis of a number of factors.
The bank wants to know what your / your net income is. We indicated at the beginning of this article that you should never borrow the maximum loan amount. After all, you do not want to get into trouble right away if it is financially wrong. For example, in the event of a dismissal or incapacity for work. But the bank also takes this into account when determining the amount of the loan. This way they can see how much money you have to keep (in addition to repaying the mortgage loan) in order to make ends meet.
Do you have savings? Then you can take out a loan with the bank faster. If you invest this savings in an owner-occupied home, it is easier to borrow a higher amount. In Germany, it has been the most normal thing for years to finance part of the house value itself. In fact, it is mandatory. If you have savings, then you certainly do not have to borrow the maximum amount of money.
We always recommend home buyers to opt for a shorter term instead of the maximum term (please note: this is not advice but a tip). In that case, you are always cheaper, even though the monthly expenses are somewhat higher. Nevertheless, you build up a little more financial security with a maximum term. The costs are a lot lower each month. You will not get in trouble right away when you have to deal with setbacks in financial terms.