When it comes to affordable property financing, interest rates are often regarded as the most important element. However, if you consider the whole issue, then you will realize that repayment is also an important point. By means of redemption, you are in control of two things: How long the loan agreement will last, and how high the interest rate should be which must be transfered to the credit institution. In the event of a contract conclusion with the relevant bank, a monthly annuity will be set. Speaking of annuity, it represents a payment variable depending on interest rate and duration through which the initial credit amount including the interest rates will be repaid, during the loan term. Annuity consists of a interest portion and of a repayment amount. While the interest share and the repayment portion vary, the amount of annuity remains constant throughout the entire term.
Due to the constant redemption, the residual debt of the loan will decrease month by month. Whereby the initial high interest portion will diminish. This interest saving will automatically flow into the repayment.
So far, so good. To state the interest rate as high as possibly, would also be a mistake, just like setting a extremely low rate. Financial margins for building up savings as well as unpredictable costs should always be covered by monthly liquidity. And last but not least, you also want to enjoy life. Please consult our experts. They will assist you. By doing so, they will create the best balance for you.
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Information about the author:
Alexandra Schneider is a certified bank business administrator and she writes about up-to-date topics, for FinanzierungsExpert.