For some wishes and purchases, such as the renovation or purchase of one's own house, a new car, new furniture or furnishings, perhaps also for a vacation, the necessary money is not always fully available.
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A portion of Eigenkaital as a reserve is a good support, the remaining amount must then be from a savings bank or a bank. Be financed by a credit institution. How to find the right partner we explain again at the end.
An anniutätendarlehen is the term used in business for a loan that is repaid in equal and regular installments and is one of the most common loans in the field of real estate and construction financing. To many private borrowers an annuity loan is therefore given, with the classical installment loans as well as with building and real estate financings. Thus this loan is particularly suitable for all, which use their own real estate and would like to keep the interest risk particularly small with a construction financing.
The annuity loan thus differs from other loans in terms of repayment and interest rate, which can change in other loans or where first of all the accrued interest is repaid and only then the actual installment payment begins. Or also for loans where at the end of the term then the entire loan amount is due. The constant repayment rate is called annuity.
So with an annuity loan, interest is repaid along with the principal, and the monthly payment is always the same. As the term of the loan increases, the amount of repayment increases more, while the interest rate decreases.
How does the annuity calculator work
Using some basic information, such as the loan amount, annual interest rate, initial repayment and annual special payment, it is quite easy to calculate the annuity. In any case, these sums and percentages are known because they come as information from the bank.
The result has now determined the annual rate, where the monthly rate can be quickly calculated yourself, in our example:
1500 euros / 12 = 125 euros per month
Furthermore, the total term is determined, the interest payments made and the interest and redemption expenses, both during the entire term.
In addition, the annual repayment expense is displayed, clearly showing how the remaining debt is continuously decreasing.
Advantages of an annuity loan
One advantage here is unscheduled repayment, which can be set aside in an extra account, for example, so that it is then available each year; this reduces repayment even more than with installments alone.
Another advantage is the constant installment payment and thus the accompanying constant financial burden. In addition, the remaining debt at the end of the fixed interest rate is fixed. The private borrower thus repays the loan via the predefined monthly installments. Therefore, he can also rely on the fixed interest rates and, in the case of real estate financing, on the fixed amount of installments during the fixed interest rate period.
The debit interest rate is usually between five and fifteen years, but can also be fixed for up to thirty years depending on the lender.
The constant annuity, or repayment rate, is given by the fact that the interest portion of the payments decreases over time as the remaining debt decreases and the repayment portion continues to increase. In short, as the term of the loan increases, the proportion of the loan that is repayable increases, whereas at the same time the interest charge decreases. Thus, a constant installment is always repaid, only the last installment can deviate from the fixed annuity and evtl. higher or lower.
If the terms are shorter, the monthly burden increases and at the same time the sum of the interest to be paid also decreases by the faster repayment. How to repay as quickly as possible.
Disadvantages of an annuity loan
One disadvantage is that during the term or. no change in the contract is possible during the fixed interest period. For more flexibility, unscheduled repayments can be contractually agreed with the bank. If you want to make extraordinary repayments without these agreements, the bank will charge you for the costs incurred by the unplanned repayment.
After ten years, the borrower has a special right of termination on the basis of § 489 BGB (Civil Code Book). Thereafter, a construction loan can be terminated with six months' notice for repayment. Then the financier, i.e. the bank may not charge an early repayment penalty.
Another disadvantage is the risk of interest rate changes after the fixed interest rate for the final financing has expired. Since one does not know how the capital market will develop over the years, the interest rate at the end of the fixed interest period may be higher than when the loan was taken out. To reduce the risk, there is the option of a full amortization loan or a forward loan.
In the case of a full repayment loan, the repayment rate is selected so that the financing is also repaid in full during the fixed-interest period. Overall, it offers a very high degree of planning security.
With a forward loan, a fixed interest rate is agreed upon for the closing financing at this point in time, even if the loan is not called until a later date, for example, in a year, sooner or even later. The debit interest commitment and the monthly installment payments do not start until the disbursement date.
Special features of real estate financing
In the case of real estate financing, the total amount is generally higher, so here is usually not calculated with a fixed term, but rather the period for the fixed interest rate the bank guarantees the borrower the interest rate that is agreed upon. In addition, the initial amortization is agreed, this describes the percentage of the loan that will be paid back in the first year.
As is usual with an annuity loan, the repayment portion of this financing also increases in subsequent years as the interest portion decreases and the monthly installments remain the same.
Again, the annuity represents a compromise between a high initial repayment for the fastest possible repayment and the monthly burden of the installment payment.
Due to the long terms, however, small differences in the interest rate can significantly affect both the initial repayment and the total interest to be paid, as well as the timing of the total repayment.
How to calculate the annuity loan
The loan can be calculated using a formula. With the information of the loan amount, interest rate and term, the annuity or. calculate the monthly installment:
Annual annuity = C0 * ANFn,i
C0 = loan amount, ANFn,i annuity or recovery factor also annuity factor this can be determined with the following formula:
The monthly payment method, which is common for installment loans, is calculated according to this formula:
Monthly rate = C0 * (i/12) / (1 – (1+i/12) -Tn)
Tn = total number of monthly installments
In the case of financing for a property with an initial repayment, the annuity results from the annual interest and repayment portion:
Annual annuity = C0 * (i + (Initial repayment / 100))
Finding the right partner
Today there are several possibilities and it does not always have to be the house bank, many other banks, as well as direct banks offer a favorable financing and favorable interest rates. A search on the Internet is one of a starting point, also so-called comparison portals exist for the most diverse areas.
Besides z.B. Insurance, electricity or car comparison, just to name a few, there is also the possibility to compare loans, but often in these comparisons private data are required, who does not want to can also by phone or by mail to the various institutions to inquire. Some credit institutions also offer an online calculator or a current interest rate on their website, so you can also get the desired information for a calculation directly there.
A personal consultation and a payment plan is in any case very helpful to get also a comparison. Although perhaps the house bank in the interest rates are higher at first moment, there are ways to get a cheaper loan than usual because of the annuity.
An example is the modernization credit, here the bank can offer a more optimal repayment. Therefore, a favorable interest rate at an unknown bank is not always the best choice. Better to make a detailed comparison and consider personal financial advice.
For construction financing, a combination of loans from the bank and a loan from the state subsidy from the KfW offers, the latter offers low-interest financing as well as a subsidy, provided that energetic renovation or construction is carried out. However, here are some conditions to be met, u.a. an energy consultant and a surveyor must be commissioned by the borrower, they are then the ones who settle everything with the KfW bank.