Planning our home financing

2018-06-19 12:21:13

So, I'll summarize:

Better to put less cash into the property financing. Possibly only finance the incidental costs. That should not make a difference in interest with a loan amount of only 90,000 euros.

Should I then choose a high installment or is it better to save money in cash?

What about the possibly necessary new car? Finance and pay off in installments or pay in cash? That would then be at the expense of available equity.

Again as an overall view: is that feasible with the costs? 250,000 euros for the house, 40,000 euros incidental costs. I would come to a total financing loan of 340,000 to 350,000 euros.

Thanks in advance for the help!

2018-06-19 12:32:07

Sorry HilfeHilfe, this is not meant to be offensive and it is also better if you do not repeat it, because it does not make it right.

I really cannot follow that.

What is gone? Cash can be paid out again by the bank, it does not affect the loan-to-value ratio at all. Cash used in the property reduces the loan-to-value ratio, so why do I need cash in this constellation here? It is not decisive whether cash is still available, which is even the case through newly saved money, but it does not matter whether equity is available in the form of cash or existing assets.

The statement "Cash is king," are you referring that to a serious real estate financing? What is leaking away?

Kitchen? Either way, it has to be planned in the costs, but it does not increase the loan-to-value, or it has to be deducted and if it is mentioned in the cost plan, then it is also financed.

Potential real estate financiers also always read along without opening a thread and it simply reads wrong when you say cash is king!

2018-06-19 12:40:25

So, I'll summarize:

Feel free to put less cash into the property financing. Possibly only finance the incidental costs. With a loan amount of only €90,000, that should not make a difference in interest.

Should I then choose a higher installment or save money in cash instead?

What about a possibly necessary new car? Finance and pay off in installments or pay in cash? That would then come at the expense of available equity.

Once again, as an overall view: is this feasible with the costs? €250,000 for the house, €40,000 incidental costs. I would end up with a total loan of €340,000 to €350,000.

Thanks in advance for the help!

That's how I would do it. Provided it makes sense and does not affect the interest rate, only bring in as much equity as necessary for the property financing.

Likewise, consider not choosing too high an installment but continue to build up equity as cash funds.

Yes, you pay more interest on the property financing, but with orderly finances you have better flexibility in the overall financing including the house construction. Maybe you want to outsource trades and do them yourself and you lack money for the materials.

Just a thought.

2018-06-19 12:42:41

So, I'll summarize:

Better to put less cash into the property financing. Possibly only finance the ancillary costs. With a loan amount of only 90,000 euros, that shouldn't make a difference in interest.

Should I then rather choose a high installment or better save money in cash?

How about the possibly necessary new car? Finance and pay in installments or pay in cash? That would then come at the expense of available equity capital.

Once again as an overall view: is this feasible given the costs? 250,000 euros for the house, 40,000 euros ancillary costs. I would come to a total financing loan of 340,000 to 350,000 euros.

Thanks in advance for the help!

You can't judge this across the board, but in principle it doesn't matter whether the cash is held in cash or invested in the property.

What is crucial for a statement is how (variable or fixed) I finance the property and where at the best conditions, so they keep their options open? Variable (to avoid being tied to the bank) or fixed because I already know my bank or have committed to one.

The bank, if I want to select the market, with the best conditions will have requirements, these must be found out and one should also know that not all banks support property financing and certainly not variable financing.

2018-06-19 12:51:46

that's how I would do it. As long as it makes sense and doesn’t affect the interest rate, only bring in as much equity into the land financing as absolutely necessary.

Similarly, consider not choosing a rate that is too high but rather continue to build up equity as cash.

Yes, you pay more interest on the land financing, but with organized finances you have better flexibility in the overall financing including house construction. Perhaps you want to remove trades and do them yourself and you lack money for materials.

Just a thought.

Please, please explain where money is lacking and why liquid funds should not be available, even if he stopped saving altogether.

Why should he now unnecessarily pay the variable interest rate when he can save on these interest payments (and continue saving) and by using the equity increase the choice of banks for land financing, possibly also variable, while in the end not a single cent of liquid funds has to be missing?

Why hold cash if it might cost a lot of money for possibly 2 years, and if that is not to count, why do you need cash if it is tied up in the land value, included in the overall concept, and the bank can disburse it again from the financed funds for, for example, materials for own labor or kitchen or whatever if needed?

The loan-to-value ratio doesn’t change at all, upfront he is more flexible in the choice of banks, he saves interest, and in the end everything is managed by choosing the right bank (already upfront in the land financing) and the buffer remains the buffer anyway, regardless of whether with cash or without!

2018-06-19 13:03:53

this is how I would do it. As long as it makes sense and does not affect the interest rate, only contribute as much equity as absolutely necessary to the land financing.

Likewise, consider not choosing the installment too high but rather continue to build up equity as cash.

Yes, you pay more interest on the land financing, but with organized finances you have better flexibility in the overall financing including house construction. Perhaps you want to take out trades and carry them out yourself and you lack money for the materials.

Just a thought.

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Planning our home financing

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