According to the classic 20 percent rule , home buyers should be able to handle at least 20 percent of the purchase price of the property on their own. This enables good interest rates to be achieved on home finance. This rule used to be a kind of unwritten law on home finance, but that has now changed. Regardless prefer most borrowers home buyers, at least the purchase costs such as brokerage fees, notary fees and the transfer tax, may pay out of pocket. Nevertheless, there are many banks and other lenders that offer customers home finance without equity. If you choose this type of financing, you should familiarize yourself with all the important details and learn about the advantages and disadvantages.
This is how home finance works without equity
Although many credit institutions prefer borrowers with financial reserves, home financing without equity is possible. Compared to classic real estate financing, you as a borrower do not need your own capital. This means that all costs incurred are financed through a real estate loan. If a property is financed in this way, repayment rates and interest are noticeably higher than when buying property with equity. This makes buying a house more expensive, but you can enjoy some advantages.
With full financing , just like with a classic real estate loan , you have to meet certain requirements. On the one hand, you should have a permanent employment contract and a secure job. On the other hand, your income should be as high as possible and definitely solid. For example, if you work in the public sector, there is a particularly high probability that you will be granted home financing without equity. If you work as a freelancer or are self-employed and do not have a high, regular income, most borrowers will reject classic full financing . In such a case you can get a house financing without equity approved, but you have to bear the additional costs of buying the house yourself. Each credit institution has its own rules and will only approve your loan application once your liquidity has been checked in detail.
Home financing without equity has advantages
If you opt for home financing without equity and still have larger financial reserves, this can be a great advantage. With these reserves, you can easily overcome a financial bottleneck and are also liquid in an emergency. Full financing is also worthwhile in the low interest rates . Compared to classic financing, you don’t have to wait years and save money and, in the worst case, live with significantly worse conditions. Instead, you can go straight to a home loan without equity and take out a loan. The bottom line is that buying a house is even cheaper than with traditional financing thanks to the low interest rates.
Without financial reserves to own your own home
Home finance without equity was almost unthinkable many years ago, but is nothing special these days. There are many reasons for full funding . Young families with children often want their own house as soon as possible and have not yet been able to save equity. Others already have to pay a high monthly rent and prefer to put their money into their own home. There are even borrowers who have enough equity capital, but would rather keep it as a reserve for future emergencies. Would you like to fulfill your dream of owning a home and have no reserves or . If you do not want to use this, home financing without equity is a suitable and advantageous solution.