Financing without equity - Repayment / Interest

2016-05-18 09:26:21

Yes, this is a difficult situation. Calculate at least 3 more months, because if you have to move out, you have to move out. Neighbors here have moved in despite only having a screed floor, I would never do that with children (unless it’s absolutely necessary).

We sold our condominium within 3 weeks and found a cost-neutral place 4 months later so that we can contribute many [EL]. Tough time, but soon over :).

2016-05-18 09:27:59

As I said... currently you actually can't do anything except sell. There are far too many unknowns to make serious considerations.

A trend can already be taken into account. We had calculated with a worst case and ended up significantly better after the sale.

But if you sell now without roughly outlining the new project, you will have a problem with the ongoing loans, which have to be terminated and thus the VFE have to be paid. A refinancing is cheaper, but you really have to calculate and plan well. However, it is possible.

2016-05-18 09:35:39

Really? Is that so? I thought there are only 3 and 98 ;) What does it take to get 100? No mobile contracts? No overdraft? 1 million in the [TG]?

Let's leave Schufa as a company and its quality aside. What they do have there, however, is a lot of data. We probably agree on that.

By the way, the million in the Tagesgeld does not affect the score at all, except insofar as it may reflect other existing behavior. And that is the most important thing in the whole matter. It is pure statistics and a pure probability consideration.

Thus, it is one piece of information among several.

So let's look at the probability of default (PD). This is internationally standardized and always considered over a one-year period and is the counterpart to the probability of fulfillment (in our case here, Schufa score).

Statistically speaking, there is a default within 50 years.

No one can tell you whether it will be in the first or last year. Nor does it say anything about how high the default amount will be (keyword collateral) and how much can still be recovered (recovery rate).

If you now have the opportunity to grant a loan to 50 people each for one year for 1,000 euros (unsecured) and you are statistically sure that you will not get your money back from one of these 50 people, then you have to charge 2% interest from each to cover your risk. Then you have (on average) not earned even 1 cent yet.

2016-05-18 09:43:24

I would first have been interested in how high the interest rate might be and the possible repayment rate plus interest..

I would discuss the whole thing with the current bank. The unknown factor will be how large the difference will be between the selling price of the existing property and the remaining debt on that property.

Have you paid down a lot in the last 6 years?

Possibly, this could effectively release equity (i.e. if there is a positive difference).

Since you want to build; that takes time. So, the whole thing will run via a bridging loan. From the bank’s perspective, that’s not a problem.

However, from my point of view, you are "tied" to your current bank, so you should engage with them as soon as possible.

2016-05-18 09:44:59

As I said..currently you actually can't do anything except sell. There are way too many unknowns to make serious considerations.

But; go to the bank if you have financed the existing property.

2016-05-18 09:45:55

Let's leave the Schufa as a company and its quality aside. What they do have, however, is a lot of data. We probably agree on that.

The million in the savings account does not affect the score at all, except possibly through other behaviors that might also be present. And that is the most important thing about the whole matter. It is pure statistics and a pure probability consideration.

So it is one piece of information among several.

Let's consider the probability of default (PD). This is internationally standardized and always considered from a one-year perspective and is the counterpart to the probability of fulfillment (in our case here, the Schufa score).

Statistically speaking, within 50 years there is statistically one default.

No one can tell you whether it will be in the first or the last year. Also, this says nothing about how high the default amount will be (keyword: collateral) and how much can still be recovered (recovery rate).

If you now have the opportunity to grant a loan of 1,000 euros each to 50 people for one year (without collateral) and you are statistically sure that you will not get your money back from one of these 50 people, then you have to charge each of them 2% interest to cover your risk. Even then, you have (on average statistically) not earned a single cent.

What does this mean in practice? I know the Schufa score of many people. But I only know values of about 3% (+/-) and 98% (+/-). Are there 100% values? Who has those? I myself have only around 96%. For whatever reason..

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Financing without equity - Repayment / Interest

Uwe82

Uwe82

toxicmolotof

Caspar2020

Caspar2020

Steffen80