What loan amount and how much equity capital should be reported to the bank?

2017-06-22 00:07:19

A construction loan is a real estate financing .. that means, only real estate things are financed at this low interest rate...why? Because movable things quickly disappear in case of a forced eviction. [emoji6] it is good that at least fitted kitchens can be financed. Therefore, please really calculate exactly what should be paid from equity and what should remain as reserves.

Even though the comment is already a few days old, I would like to disagree with it (just for the sake of completeness).

A construction loan condition can also be granted to finance a property (or something completely different). For example, let's take a Ferrari in a simplified manner. You can also get it under these conditions, as long as the collateral (and that’s what matters) is a real estate.

2017-06-22 00:09:46

the term "remaining debt at the end of the fixed interest period" means something to you, doesn't it?

2017-06-22 00:29:03

but you do understand what "outstanding debt at the end of the fixed interest period" means, right?

Yes, but what does the outstanding debt matter if the assets built up in return are significantly higher?

If my outstanding debt at the end of the term is perhaps 50,000 euros higher, but the assets in return are 100,000 euros higher, then it should be clear which option is more advantageous.
And if interest rates unexpectedly rise significantly, you can still pay part of the loan from the higher assets at the end of the term and need less money for the follow-up financing – or you can already use the special repayment in between.

2017-06-22 06:32:26

You fail to recognize that the interest savings through repayment are guaranteed, the increase in value in stocks is not and can even reverse.

Risk class 1 vs. 3.
A really, really dumb idea, to say it directly.

Moreover, the repayment is tax-free, the capital gain is not.

2017-06-22 07:07:50

Doing something like that is absolute stupidity and should not be publicly promoted. This is exactly the same madness as buying stocks on credit - building a house does not even need to be included in the calculation.

2017-06-22 07:24:36

I consider that statement nonsense. Every percentage point more repayment is a very bad investment. Let's do the math: What return do we get from repaying 1,000 euros more? Exactly, the saved interest on 1,000 euros, so let's say at an interest rate of 1.5% currently 15 euros per year. But we could just as well take the 1,000 euros and put them into a well-diversified portfolio. After taxes, that's certainly around 4% per year. So that's at least 40 euros. If we now consider compound interest and the savings over several years, that adds up to quite substantial amounts. Of course, one must have the self-discipline to invest the saved repayment and not consume it.

Humbug. 99.9% of Germans (including me, and I am a banker) are too dumb and too naive to invest money wisely. We have been and still are a building savings contract nation.

If you have a loan / credit and are in a low interest rate phase, the best investment is still to repay it. Risk-free.

Then, after 15 years, you can continue with the free cash and invest in overnight money^^

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What loan amount and how much equity capital should be reported to the bank?

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