Home Purchase Without Equity

In the rarest of cases, full financing is to recommend rising real estate prices, high rents and low-cost building loans entice many people to ask a home purchase without equity. In addition to the financial risk, exposing themselves to the borrower, the banks have become far more restrictive in granting. Equity ratio falls new studies show that the equity ratio has almost halved over the last two years. In Berlin, she was early 2010 at an average 20 percent, then end of 2012 on just 11 percent to sink. In Cologne, it fell from 17 percent to nine percent. Get more background information with materials from Nicholas Carr. A similar image is reflected also in the cities of Munich, Hamburg and Frankfurt am Main.

Leaders have applied a home purchase without equity, the so-called full funding, some banks still active, now many on this issue stand down. For most credit brokers, the old rule of thumb seems at least 20 percent equity”to be maxim. High credit rating is required to purchase a house without equity is only at granted a high credit rating of the customer. A solid job with high income is a minimum requirement. The banks also consider whether the property itself is used. A personal use has a positive impact on the provision of full financing in most cases. In any case, missing money will be punished with a lot worse conditions.

The mortgage and banks can well pay their credit risk, so that home buyers without sufficient equity to accept hefty interest-rate spreads”, says the independent financial advisor Bernd Lai mountain. In any case should meet the financing on long-term viability are checked, especially where it is the question: how much House can I afford? “Many people want to no longer wait increasing risk appetite, they have saved something to himself. Also a unique opportunity for a profitable investment make attractive a home purchase without equity. What prospects it should not forget: the required sum can again to 20 percent be higher than the actual purchase price. The increasing risk appetite of customers is evident not only when purchasing a house without equity. This development shows also the ratio of desired loan amount to the net income. 70 On average monthly salaries have asked interested parties end 2012. 2010 borrower would have required only 50 times their monthly income as a loan. “Experts see development critical Ralf Weitz, Director of mortgages at Immobilienscout24 is critical of this development: households with low incomes, in particular have often no financial buffer, if the circumstances change.” Should increase interest rates in the future, buyers get no later than the follow-up financing under great pressure. So ends the dream of homeownership in a foreclosure, it is always advisable with a house purchase to wait until it has created for himself a solid financial basis.