Type of use of equity capital

Those who properly use equity can then also talk to their bank advisor about settling later invoices that normally would not be covered by it (e.g., kitchen). Our bank person also does not want to see every invoice; they are only interested in the large invoices.

First of all, you need to know what equity is. That is the difference between the borrowed amount and the value of the house. So if you buy a house worth 200,000 euros for only 100,000 euros, the bank will count it as if you had to pay 200,000 and had 100,000 equity. Because if you become insolvent, the bank can easily get its full money back for the house. If you buy it for 200,000 and have no equity, the bank runs the risk of making a loss on the house in case of insolvency and you are left with the debt. That risk is the only thing that matters ...

and that's where the problem lies. you buy a house for 200,000€, pay 20,000 incidental costs and the house has a lending value of 160,000€ (80%). you have 60,000€ equity and have still leveraged the property at 100%. the interest rate is then rubbish