Navigating the challenging terrain of high-interest rates and expensive home loans can be a daunting task. However, the financial advisors at FMH-Finanzberatung encourage cautious homeowners to think beyond just interest rates when financing their projects.
The European Central Bank's aggressive strategy of ten interest rate hikes in 16 months has led to a dramatic collapse in the German real estate market, causing a significant decline in construction financing demands. As of now, the average interest rate for a €400,000 loan (with an 80% loan-to-value ratio and a ten-year fixed interest rate) stands at 4.16%. This is a stark contrast to the average interest rate of 1.15% in November 2021.
Given these circumstances, anyone willing to undertake the home ownership project during this period must calculate meticulously. Alongside keeping an eye on the interest rates, it's crucial to adapt repayment conditions to personal needs. In high-interest rate situations, keeping the monthly burden manageable becomes vital. This usually means that the debt melts away slowly, but with flexible repayment options, customers can react to financial changes, making their repayment terms more adaptable.
The Bundesverband der Deutschen Volksbanken und Raiffeisenbanken (bdvr) conducted a study on behalf of ntv, examining which banks offer the most flexible loan agreements with respect to lead time, special repayment options, and repayment modification capabilities. Here are some banks standing out in these categories:
- DEVK - the insurance company: particularly noteworthy in terms of commitment interest and special repayments.
- Signal Iduna - the building society: excels when it comes to special repayments and changes to repayment terms.
- 1822direkt: stands out from competitors in terms of commitment interest rates and repayment changes.
- ING: also performs exceptionally well in commitment interest rates and repayment changes.
- PSD Bank Koblenz and Sparda Bank Südwest both excel in offering flexible repayment options. Customers need to evaluate their priorities between special repayments and repayment modification.
It's important to note that these winning banks should not levy an interest premium for the mere possibility of adjusting repayment terms. Rather, they should charge fees for changes that are implemented.
The ntv home loan comparison is an excellent resource to find the best current interest rates for home loans.
