With financial support in your own home – tips on Riester, credit and relatives loans
For many people, having their own property is a heart's desire. Not only to avoid rent increases, but mainly to provide for retirement and to realize personal living dreams. Very few can do without financial help. Debt capital is required for solid home finance. In order to facilitate procurement, information below on Riester home savings, loans and relatives loans.
Riester building society savings – planning security and allowances
Would you like to buy or build a house in a few years and value planning security? Then a Riester building society savings contract can be a sensible solution. The state subsidized Single people with 175 euros yearly. The child allowance is 300 euros per child (born after 2008). With Riester building society savings, the focus is on accumulating a credit with the help of state support in order to later claim a low-interest loan. “In addition to the allowances, it is another component of the funding that the savings rates for the Riester building society contract can be tax-deducted as special expenses up to € 2,100 per year,” adds the finance and business portal ftd.de in a guide to Riester building society savings added. It contains further information and key factors that are important when looking for a suitable building society contract. With regard to the comparison of building societies, among other things Loan and credit interest mentioned as decision criteria.
Important: Riester building society savings are based on the principle of downstream taxation. This means that building society savers benefit from tax savings during their working life and that taxes do not become due for the subsidies until they are old. Since the tax rate is generally lower in old age, the tax liability is reduced.
Credit – How Much Home Can You Afford?
The more equity you can show, the more banks are willing to provide debt capital. Sufficient equity has a positive impact on creditworthiness, which in turn has a positive impact on lending rates. An equity share of 20 to 40 percent is advisable. Before obtaining offers for bank loans for home financing, all cost factors must be taken into account and the monthly loan rate realistically calculated. In addition to the purchase price or the actual construction costs, the ancillary costs that cause the purchase or construction should not be underestimated. Real estate transfer tax, notary fees, brokerage commissions and land register entry are just a few expenses that need to be taken into account. Ideally, not only the additional costs can be paid with equity, but also 20 percent of the total costs.
In principle, it is advisable not to invest all of the equity in the property. An iron reserve of three months' net income prevents financial bottlenecks and serves as an important buffer. After all, something can break at any time. Expect unplanned workshop costs for the car, defective household appliances and additional tax payments, so as not to get into trouble with unforeseen expenses!
Our tips for everyday financial planning can help you save.
When comparing loan offers, the primary focus is on the APR respected. After all, this key figure allows an uncomplicated comparison of loan costs. To focus solely on this interest rate would be negligent. These points are also crucial:
• Running time
• Special repayment
• Fixed interest rates
• Borrowing rate during the borrowing period
• Flexibility in the repayment rate
The loan agreement must fit the budgetary possibilities of a household perfectly. When in doubt, the advice of an independent financial advisor is useful so as not to take unnecessary risks.
Relatives loan – a written contract prevents conflict
You may be able to get debt at a particularly favorable price with the help of a relative loan. Relatives, acquaintances and friends can act as lenders. So the money does not come from official agencies. This has the advantage that no query at the Schufa credit agency takes place and access to debt capital is possible even with a low credit rating. In addition, a relative loan increases equity and this strengthens the position towards banks.
tip: A relative loan should be based on trust, but both parties benefit from a written loan agreement. A document is not an obligation due to the freedom of form, but it prevents misunderstandings and anger. If the document is missing, the BGB regulations apply in the event of a dispute and they can have massive negative consequences. In addition to the borrower, lender, loan amount and agreed interest rate, the term and repayment modalities should be specified. With their signature, borrowers and lenders confirm their consent.
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