Shortly after the financial crisis peaked, prospective home builders and homebuyers found it difficult to complete low-equity financing. At that time, the banks were extremely cautious and wanted primarily clients who bring as much equity as possible. But since then, the situation has eased considerably again, the mortgage lending without equity is now offered by numerous banks.
However, one should therefore not think that the use of equity has lost much importance. A look at the mortgage rates of individual banks makes it very clear that the use of equity is very important: the more equity is used in relation to the loan amount, the better the interest rate. Experts also speak of the so-called loan. It indicates the extent to which equity capital is used or the relationship between real estate value and loan amount.
Basically, lending has always been important because banks simply run risk management. However, this seems to have intensified recently, ie equity has a particularly large impact on the cost of financing – and aspiring borrowers should therefore try to use as much equity as possible.
However, this is often easier said than done. When it comes to calculating the mortgage lending, the banks take no account of all the equity that is used by the builder or buyer. Many banks make deductions, ie expenses for ancillary costs (real estate transfer tax, notary, possibly brokers, etc.) are not taken into account, so that the effective use of equity capital may be significantly reduced.
It is important to know that in some of these calculations the banks act quite differently. Our mortgage lending experts know exactly how each institution deals. Thus, we can say exactly which banks attract the most attractive mortgage rates.