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Building your own home: low interest rates, secure for the long term
Photo: Jens Büttner / DPA
Loans with long-term fixed interest rates create security.
They are usually 0.3 to 0.6 percentage points more expensive than short-term loans.
In a few years' time, real estate buyers will often not need follow-up financing for this, explains Stiftung Warentest in its magazine "Finanztest" (10/2020) - and they are thus protected from the risk of a cost explosion.
Two models with long fixed interest rates being tested
The experts analyzed two models with no interest rate risk: immediate home loan savings and loan repayments with long fixed interest rates.
They asked over 70 providers for this.
The result: Loans with long-term fixed interest rates - of 20 or 30 years - do not have to be expensive.
For example, the cheapest full repayment loan with a fixed interest rate of 20 years was 0.63 percent effective interest rate from a national provider.
A loan with a fixed interest rate of 30 years and top conditions was available for 1.06 percent effective interest.
For comparison: With a cheap home loan and savings loan, the effective interest rate for 18 years was 1.14 percent.
In the test, the top offers for full repayment loans were therefore a lot cheaper than the combined loans of the building societies.
Special offer influences test result
The reason for this, however, was the special offer from a bank that several credit intermediaries and banks have on offer, according to the testers.
If you look at the results without these special offers, the immediate home loan and loss financing is a cheap alternative to full repayment loans - but also rather complicated for laypeople.
With this model, customers receive an advance loan.
All they have to do is pay interest and save a home loan and savings contract at the same time.
If the home loan and savings contract is ready for allocation, the credit balance and the home loan and savings loan replace the advance loan.
Borrowers should be well informed about the model in advance, because there are risks: the fixed interest rate of the advance loan and the allocation of the home loan and savings contract must be well coordinated.
Otherwise it can be expensive.
Secure loans are often inflexible
With both models, the rates are usually fixed from start to finish.
Borrowers should therefore calculate realistically which monthly installments they can afford - and want to expect.
In addition, the "financial test" experts warn: Interest rate offers can change at short notice.
You therefore always advise obtaining several offers, from at least three institutions, and comparing the effective interest rate and the details with one another.
In the test, there was an interest rate difference of around 40,000 euros with a 20-year term between the cheapest and the most expensive provider of a full repayment loan.
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mik / dpa