Your dream home is suddenly available and you would like to move in immediately? One possible solution, for those who need a building loan immediately, is the immediate construction financing of the building societies a possible solution. The immediate construction financing is also called instant building society loans, combi credit or constant loans. With this financing, building societies offer you the opportunity with which you can combine home savings and the immediate purchase of your dream home. This financing model thus combines a loan in advance with a home savings contract.
In today’s blog post, you’ll learn everything you need to know about instant mortgage lending and what benefits and risks this financing brings with it.
How does instant mortgage financing work?
In the case of immediate mortgage lending , you take out a loan from a bank and at the same time conclude a home savings contract . The Bauspar sum of Bauspar contract has the same amount as the advance loan . With the loan you can start the project “dream house” directly. Until the Bauspar contract is awarded , you pay the monthly interest on the loan and a pre-determined savings rate to your Bausparkonto . As soon as the Bauspar contract is ready for rendition, the rescheduling takes place. The advance loan is replaced by the savings and the home savings loan. Thereafter, you pay the interest contribution and the repayment contribution for the home savings loan until full repayment.
Advantages and Risks of Instant Mortgage Lending
Before you decide for or against this financing model , you should carefully weigh the benefits and risks of instant mortgage lending.
The benefits of instant financing
- Constant low interest rates for the entire financing period.
- The financing rate of the loan is known and plannable from the beginning.
- You can make special payments on the home savings contract at any time.
- After expiry of the fixed interest period, you can make special repayments on the building society loan for free .
The risks of instant financing
- Lack of price transparency – in advance, prospective buyers only experience the effective interest rates for the advance loan and the building society loan, but no effective interest rate for the overall offer. Good finance brokers can make the overall costs transparent to you compared to an annuity loan.
- There will be a closing fee for the Bauspar contract of 1.0 to 1.6 percent on the Bauspar sum.
- In the allocation of savings and loan contracts, there is a minimal risk that the savings agreement is not allocated at the scheduled time, this case occurs would possibly a more expensive interim financing due. Building and loan associations are not allowed to guarantee their allocation at any time according to the law.
- Strong loyalty to the provider – a change of provider or a rescheduling is associated with high costs.
- During the first 10 years, a repayment by, for example, selling the property will result in a higher prepayment penalty because you are not repaying the loan.
- In many concepts, there is only the possibility of “special payment” on the home savings contract. Good concepts that you get from competent partners provide a real special repayment option in the advance loan. This can even reduce your overall rate during runtime and shorten your runtime.