What is the usual difference between the nominal interest rate and the effective annual interest rate?

Hello,

we have a financing proposal with a nominal interest rate of 1.1%. However, the effective annual interest rate is 1.18%...

Is such a high difference between the two values usual or does it rather indicate high credit costs? With other offers, the difference was about 0.02%. However, we were so trusting and let ourselves be lured by a low nominal interest rate and initially disregarded other offers.

But maybe such a high difference is usual, hence our question.

Best regards
Christian

monthly payment?

any other costs?

You did receive an information sheet [Merkblatt] after all

This is the allocation of other costs such as the [Grundbucheintrag].
HilfeHilfe is right: study the information sheets and find the differences.

so currently 0.02-0.03% is common!

BUT
if additional costs, such as contract fees for home savings contracts, are involved, they increase the effective interest rate by at least 0.10%

some banks also charge fees if an appraiser is needed, e.g. 250 EUR, which could also increase the effective interest rate.

what is best to do:
calculate the nominal interest for the term + costs for registering the mortgage (this will be the same at all banks since the same amount is registered, but it is displayed differently by the banks!). Additional costs such as contract fees etc.
in the end you get a number that shows what you pay over the term.
and compare that with all banks. Sometimes it happens that a higher effective interest rate has lower costs than a lower effective interest rate. So don't be misled by that.

PS. I just remembered:
many banks only include the land registry office costs in the effective interest rate, but it often goes through a notary, meaning many forget or do not consider the notary costs.
Other banks, e.g. ING as an example, exclude the costs of the district court, and instead include the notary costs in the effective interest rate (which are usually higher than those of the district court). This can lead to differences of 0.01%-0.02%.