Building a house, taking out a loan and paying off fixed installments regularly for decades – that was once. The classic mortgage loans with their rigid conditions are a thing of the past. There are now flexible real estate loans that adapt to the needs of borrowers.
The house builders are no longer forced into a rigid financing corset, they can change the monthly repayment rates if necessary and pay off more or less.
Real estate finance with unlimited repayment
A building loan with a flexible repayment model is the right choice for builders with irregular income. A loan agreement that allows unlimited special repayments is ideal. Individual banks go so far that they even allow a full early repayment of the loan.
The special repayment is partly free of charge but must exceed a certain minimum amount, for example 10,000 dollars. However, there is not so much flexibility for free, borrowers have to expect somewhat higher interest rates, a few tenths of a percentage point are quite common.
Repayment rate during the term
Even more important than a comprehensive special repayment right is the possibility to adjust the repayment rate for financial problems. Few builders are lucky enough to be able to pay off their building loan prematurely through unexpected additional income. Surprising burdens caused by unemployment, divorce or illness are far more common.
If the income suddenly drops, flexible repayment rates are a great advantage. The possibility of temporarily reducing the monthly installments to around 1% of the loan amount has already saved many people’s homes. Every building owner should make sure that his building loan allows a temporary reduction in the repayment burden.
This means that you can bridge financial shortfalls and then switch back to the normal repayment rate. With corresponding credit contracts, two to three repayment changes are generally possible free of charge. Individual banks allow an unlimited number of bills, but charge a fee for each adjustment. In addition to flexible repayment terms, construction financing must of course offer low interest rates. Here it is important to adjust a phase of low building interest rates and, if necessary, to secure the current low interest rates for the future with a forward loan.