Not many people know that you can secure your own home without equity! In addition, a change is beginning to occur in the area of home finance, namely towards home finance without a bank.
More information on mortgage lending without a bank:
Building finance without a bank
When it comes to owning a home and you want to call a house your own, there are a lot of things to do because, as you know, real estate is not exactly cheap, so it can be financed quickly from a tea tin. Most of the time, financing fails because of equity capital, which is often not available. If you still try to get a loan from the bank for a construction project or the purchase of a property, they will tell you that this is not possible due to the low equity ratio for financing your home. Real estate financing is advised to finance 20 if not 30% of the total costs yourself, ie from equity.
If you take a look at other countries, you will also find other customs regarding methods of financing there. Often, no equity is required for financing abroad. The equity ratio in Germany is only meant well, because not only the banks have a certain amount of financing security, but you as a borrower also protect yourself against over-indebtedness, so that the home does not become a financial trap. But more and more banks in Germany are also offering financing without equity.
Creditworthiness instead of equity
Financing without equity – where is the collateral for the bank? Simply put: in the creditworthiness of the borrower. So it is not so important to the banks how much money you can pull out of the tea box, but whether you have a safe job and how much you earn from it. However, the credit rating has to match, otherwise financing without equity is not possible.
How high must the credit rating be?
This is a good question, which unfortunately cannot be answered across the board – but you know a little about a bank’s thoughts when financing without equity. If you apply for financing without equity, the bank will check whether you are eligible for such financing. The bank prepares a household bill. This means that the income is offset against the expenses of your household. The bottom line is a number that assesses whether you still have money to live and how much you could potentially spare to repay the loan. If the bank decides that there is enough money in your household, there is actually nothing standing in the way of financing without equity. So the income should definitely be above average. In addition, your job should be permanent.
This financing without equity is currently not available behind every bank counter, but can usually only be obtained through special financial intermediaries who work with selected banks. It is also worth knowing when financing without equity that the costs here are somewhat higher than with conventional financing with equity. Of course, this is often a matter of how skillful you are at negotiating.